Suppose that the monthly compounded annual interest rate is 2.5%. What is the [2] present value β of 1 pound received in 1 month from today (in other words, the discounting factor)? Give your answer to 6 decimal places
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Suppose that the monthly compounded annual interest rate is 2.5%. What is the [2] present value β of 1 pound received in 1 month from today (in other words, the discounting factor)? Give your answer to 6 decimal places
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- Suppose that you borrow $60,000 at 9% compounded monthly over five years. Knowing that the 9% represents the market interest rate, you compute the monthly payment in actual dollars as $1,245.51. If the average monthly general inflation rate is expected to be 0.25%, determine the equivalent equal monthly payment series in constant dollars.If the annual interest rate is 12.9% and the dollar amount compounds daily, you would ( a. multiply b. divide) the interest rate by (a. 1 b. 12 c. 52 c. 365) and you would (a. mul tiply b. divide) the number of time periods by (a. 1 b. 12 c. 52 d. 365)At what interest rate (compounded weekly) should you invest if you would like to grow $3,019.81 to $4,193.00 in 96 weeks? % (Note: Your answer should be accurate to two decimal places)
- Suppose that an investment promises to pay a real 9% annual rate of interest and inflation rate is 3%. What is the effective annual interest rate on this investment assuming that interest is compounded quarterly? PLEASE SHOW HOW YOU COMPUTE EACH OF THE ITEMS.If the annual interest rate is 7%, what is the monthly interest rate that would be used as the "r" in the time value of money equation? Hint: the equation uses the decimal equivalent of the percent Enter your answer to four decimal places.You see the following rate “X”: 0.3% compounded weekly A) What is the APR of X? B) What are the APY of X? C) When compared with rate “Y” that has EAR=16%, which rate would you pick if you were asked to borrow money at that rate for one year? Why?
- If the present value of $400 paid one year from now is $320, what is the one-year interest rate? (Note: this number is also known as the discount rate.)If the annual interest rate is 8%, what is the daily interest rate that would be used as the "r" in the time value of money equation? Hint: the equation uses the decimal equivalent of the percent Enter your answer to four decimal places.If the compounding frequency is monthly and the discount factor=0.62026, what is the value of the corresponding annual interest rate? What is the corresponding continuous compounding annual interest rate if the discount factor remains at 0.62026?
- Suppose that you borrow $42,500 at 11.4%compounded monthly over seven years. Knowingthat the 11.4% represents the market interest rate, yourealize that the monthly payment in actual dollars willbe $736.67. If the average monthly general inflationrate is expected to be 0.6%, determine the equivalentequal monthly payment series in constant dollars.Suppose that an investment promises to pay a real 9% annual rate of interest and inflation rate is 3%. What is the effective annual interest rate on this investment assuming that interest is compounded quarterly?Suppose the interest rate is 6.4% APR with monthly compounding. What is the present value of an annuity that pays $95 every 6 months for 7 years? (Note: Be careful not to round any intermediate steps less than six decimal places.)