The local bank is currently offering a new investment product, where deposits earn interest according to the following scheme: • An interest rate of r is applied on the 15th day of each month. • A bonus interest rate of t is applied on the 30th day of every odd month. (These are the months of January, March, May, July, September, and November.) 1. Suppose that you want to deposit an amount of P dollars into the account twice: on January 1 and August 1 in 2023. If you want the value of your investment to be S by April 30, 2024, express P in terms of S, r, and t. (Note that r and t are not APRs.) 2. What is the effective annual rate of the above compounding scheme?
The local bank is currently offering a new investment product, where deposits earn interest according to the following scheme: • An interest rate of r is applied on the 15th day of each month. • A bonus interest rate of t is applied on the 30th day of every odd month. (These are the months of January, March, May, July, September, and November.) 1. Suppose that you want to deposit an amount of P dollars into the account twice: on January 1 and August 1 in 2023. If you want the value of your investment to be S by April 30, 2024, express P in terms of S, r, and t. (Note that r and t are not APRs.) 2. What is the effective annual rate of the above compounding scheme?
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter27: Time Value Of Money (compound)
Section: Chapter Questions
Problem 1E
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The local bank is currently offering a new investment product, where deposits earn
interest according to the following scheme:
• An interest rate of r is applied on the 15th day of each month.
• A bonus interest rate of t is applied on the 30th day of every odd month. (These
are the months of January, March, May, July, September, and November.)
1. Suppose that you want to deposit an amount of P dollars into the account twice:
on January 1 and August 1 in 2023. If you want the value of your investment to
be S by April 30, 2024, express P in terms of S, r, and t.
(Note that r and t are not APRs.)
2. What is the effective annual rate of the above compounding scheme?
interest according to the following scheme:
• An interest rate of r is applied on the 15th day of each month.
• A bonus interest rate of t is applied on the 30th day of every odd month. (These
are the months of January, March, May, July, September, and November.)
1. Suppose that you want to deposit an amount of P dollars into the account twice:
on January 1 and August 1 in 2023. If you want the value of your investment to
be S by April 30, 2024, express P in terms of S, r, and t.
(Note that r and t are not APRs.)
2. What is the effective annual rate of the above compounding scheme?
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