Question 3 (2 marks): The Cash Grab Credit Card Company charges a nominal 28 percent interest on overdue accounts, compounded daily. What is the effective annual interest rate? Show your answer to two decimal places of a percent.

Q: Your financial adviser recommends buying a 10-year bond with a face value of $1,000 and an annual…

A: We have  Face value of the coupon bond FV =$1000 annual coupon payment (C) =$55 Year of maturity (n)…

Q: A bond with a par value of 1,000 and with a bond rate of 10% payable annually is sold now for 1,080.…

A: Bond:- It is a type of promise to pay a lender their interest and principal on certain by the…

Q: You have a habit of drinking a cup of Starbuck coffee ($2.00 a cup) on the way to work every morning…

A: The price of a Starbuck coffee = $2 per cup Number of year = 30 years Interest earned = 5% Per day…

Q: 9. Kathy buys a television set from a merchant who ask P1,250 at the end of 60 days (cash in 60…

A: "Since you have asked multiple questions ,we will solve the first question for you.If you want…

Q: What is the present value of a $750 payment when interest is 6.75% in 2 years?     $657.90…

A: we have interest in two years = 6.75% = 0.0675 we have formula for present value of the annuity as…

Q: You won a prize in a contest! There are two choices: take the $500 prize today or wait one year and…

A:

Q: What is the exact simple interest on $2,800 for the period from February 12 to july 6 of 1996, if…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: You are quoted an interest rate of 6% on an investment of $1000. What is the value of your…

A: Here, it is given that an investment of $1,000 gives 6% annual interest rate that is compounded…

Q: A lottery claims its grand prize is $20 million, payable over four years at $4,000,000 per year. If…

A: We know that,  PV = FV / (1+r)n So, PV of all cash flow of this lottery is, PV = $4,000,000 /…

Q: Mohamed wishes to deposit BD10,000 to a bank that will guarantee BD15,938.48 after eight (8) years.…

A: Here we need to assume the interest rate she is expecting from the bank.  Then following calculation…

Q: Today, you invest ₱100,000 into a fund that pays 25% interest compounded annually. Three years…

A: The realistic portrayal of each money related esteem with time is known as cash flow diagram. The…

Q: In preparation for Sandara’s college education, her parents want to save ₱400,000 after 12 years.…

A: Given information,  Future value (F)= ₱400,000 Interest rate (r)= 2% Compounding period (m)= 4…

Q: A company plans to place money in a new venture capital fund that currently returns 13.05% per year,…

A: The effective annual rate gives you the actual return as it reflects the actual annual return of the…

Q: Suppose Ford Motor Company issues bonds with a face value of $500 and an annual coupon payment of…

A: Face value is the actual value of a digit in a number. To get the place value of a number, we…

Q: Find the Present Value (today) of $144 to be received in two years at the interest rate of 15%.

A: Given information,  Future value (FV): $144 Interest rate (r): 15% Time period (n): 2 years To…

Q: 10. Suppose the interest rate is 5% and that you are to receive three annual payments of $10,000,…

A: The present value is an important financial concept popularly used by business firms and individuals…

Q: At the beginning of every three months, a college student deposits $3,000 in a fund that gives 2%…

A: Depositing every three months till 48 months at the beginning  forms the annuity series or annuity…

Q: You can invest in an account that pays simple interest or an account that pays compound interest. In…

A: We need to solve the simple interest amount as well as compounding interest amount with given…

Q: Today, you invest ₱100,000 into a fund that pays 25% interest compounded annually. Three years…

A: Compound interest is the interest on a loan or deposit calculated using the starting principal and…

Q: First City Bank pays 9 percent simple interest on its savings account balances, whereas Second City…

A: Money is a commodity accepted by general consent as a medium of economic exchange. Here, we…

Q: Akhisha wanted to buy a cell phone which will have a price of P13,000 for 90 days from now due to…

A: Given  The future value of cell phone 60 days from now = P13000 Rate of interest =12% simple…

Q: You are planning to take out a 5 hundred thousand dollar fixed-rate mortgage with a 30- year term…

A:

Q: Consider the compound interest equation B(t) = 100(1.1664)'. Assume that n = 2, and rewrite B(t) in…

A: Answer -

Q: What is the price of a consol that pays $250 annually if the next payment occurs one year from…

A: Present value is the value that states that the current value of money is more than that same amount…

Q: 2. On May 11, 1993, a note due on January 10, 1994 was discounted at 12.12% simple discount. Find…

A: Definition: a discount rate is a pace of getting used to limit future incomes once again to their…

Q: earns an annual interest rate of 2.75%.

A:

Q: Making the assumption of no compounding interest , suppose you purchase a perpetuity bond from…

A: Firstly we have to calculate  Yearly Return  Yearly return = Face value x Coupon rate =…

Q: At what rate of interest compounded annually will an investment double in five years? Find the…

A: The formulae for compounding is A=P(1+r)t A: Accumulated wealth P: Principle payment r: Annual…

Q: How much must be deposited at the end of each year into an account that earns 4.0 percent interest…

A: Given information, Future value (F): $80,000 Interest rate (i): 4% Time period (N): 6 years To…

Q: The price of a bond with no expiration date is originally $1,000 and has a fixed annual interest…

A: Given Face value of bond = 1000 Annual interest payment = 150 $ Interest rate = 150 / 1000 * 100 =…

Q: QUESTION 6 What is the net present value of receiving $250 in 5 years from now if the interest rate…

A: Present value is the current worth of a future sum of money given a specified rate of return.

Q: Define the term Yield to Maturity?

A: Yield to maturity (YTM) is a rate of return of a bond or debenture if it held till its maturity date…

Q: If a lender makes a simple loan of $400 for 3 years and charges 5%, then the amount that the lender…

A: 1) Principal=P=$400years=n=3interest=r=5%Interest after 3 years=P×n×rInterest after 3…

Q: Please try to solve in 20 minute Your client plans to invest $2000 at the end of each year. The rate…

A: Future value (FV) is the value of a current asset at a future date based on an assumed rate of…

Q: A five-year bond with a yield of 11% (continuously compounded) pays an 8% coupon at the end of each…

A: In this question we have to find out the bond's price, bond's duration, effect on the bond's price…

Q: Compute the following: The present value of $25,000 each year for 4 years at a 7 percent interest…

A: Present value: Present value can be calculated by using the following formula:

Q: Find the present value of $750 to be paid four years from now when the prevailing interest rate is…

A: Present value (PV) is the current value of a future sum of money or stream of cash flows given a…

Q: If a financial asset that is valued at $18,455 in the Stock Market today would be worth $39,200 in 2…

A: The interest rate is counted as a compounding interest rate in the market as the market money can be…

Q: What is the present value of receiving $1.10 in the upcoming year, when the annual interest rate is…

A: In economics, the present value(PV) is the value of an anticipated stream of income determined…

Q: Determine the principal P that must be invested at rate  r = 3 1 2%,  compounded monthly, so that…

A: Given that, A = $500,000  Rate of interest (r) = 3×1/2% = 7/2% = 0.035  Time period (t) = 17…

Q: The following table summarizes prices of various default-free zero-coupon bonds (expressed as a…

A: For the three-year Zero coupon bond YTM of 3 year zero coupon = FVPV1n- 1 FV = Face Value = 100 PV =…

Q: Which Interest rate is better to use the simple interest or compounded interest plan, explain your…

A: The interest rate is the amount charged on the principal by the borrower to the borrower to use the…

Q: 9.76 percent and the face value is $1,000

A:

Q: what is the present value of a loan when a monthly payment of ₱3,250 is needed to extinguish for 3.5…

A: Present Value gives the value of a series of cash flows when it has been discounted with the current…

Q: Define the term effective interest rate, commonly known as annual effective yield, or annual…

A: The interest rate is the rate which is charged by the bank to the borrowers. It is some portion of…

Q: Steve decides to place his money into an account that compounds interest quarterly at the rate of…

A: By formula, amount that would be received by Steve after 5 years is given by- Amount(A) =…

Q: Calculate the current yield on a bond that has an annual interest payment of $200 and a resale price…

A: Bond: It is an instrument of indebtedness of the bond issuer to the bondholder.