17. Use graphical approximation techniques or an equation solver to approximate the desired interest rate. A person makes annual payments of $1000 into an ordinaryannuity. At the end of 5 years, the amount in the annuity is $5759.93. What annual nominal compounding rate has this annuity earned?Type the interest rate: %(Round to 2 decimal places.)

As per the given information: Annual payments into an ordinary annuity - $1,000 Amount of annuity at…

Answered: y is $5759.93. What annual nominal…

Business

Finance

y is $5759.93. What annual nominal compounding rate has this annuity earned?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 6FPE

See similar textbooks

Related questions

Q: Assume that a bond will make payments every six months as shown on the following timeline (using…

A: Number of semi annual periods = 40 Semi annual coupon payment = $19.03 Par value = $1000

Q: The board of directors of SSS Inc., have declared a dividend of P18,000,000. The company has 40,000…

A: The dividend is the return to the shareholders by the company for the investment made. Shares are…

Q: st borrowed $267,000 at 2.125%for 15-years.My lender is looking to sell my loan and the market rate…

A: The loans are paid by the monthly regular payments that carry the payment for principal amount and…

Q: What is the present value of the investment if the interest rate is 9 percent?

A: The concept of time value of money tells us that worth of money keeps on changing with passage of…

Q: Two payments of $12,000 and & 3,400 are due in 1 year and 2 years, respectively. Calculate the two…

A: Discounting is a technique to compute present value (PV) of future cashflows by considering…

Q: a. Calculate the present value of the annuity, assuming that it is (1) An ordinary annuity. Sulev…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: Hello! I have a financial problem that I am having issues finding the compounding formula for. The…

A: Compounding refers to the practice of providing interest in which interest is periodically added to…

Q: Just in preparation for his retirement, a man intended to invest today into a bank with an interest…

A: Annuity: An annuity is the series of payments which is received or paid for a certain period of…

Q: Randy’s, a family-owned restaurant chain operating in Alabama, has grown to the point that expansion…

A: Going public: A well established (private) company which has bright growth prospects can go public…

Q: company currently pays a dividend of $1.6 per share (D0 = $1.6). It is estimated that the company's…

A: Price of stock can be calculated as present value of dividend assuming variable growth rate of…

Q: Question 2 Rick the developer is having a hard time selling a house listed at $300,000. Being…

A: Monthly payment is the payment the person who borrows can pay the outstanding balance first with the…

Q: Problem 3. Humble Manufacturing is interested in measuring its overall cost of capital. The firm is…

A: Here, To Find: Part A. Individual cost of capital =? Part B. WACC of the firm =? Part C.…

Q: 1. Your firm plans on purchasing an existing rental property with a remaining service life of 30…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: What is the equivalent uniform annual payment for the following cash flows if the interest rate is…

A: The total payment is calculated by adding payments made in each year. Year Annual payment 1…

Q: You expect to receive $33,000 at graduation in two years. You plan on investing it at 9.75 percent…

A: Time = ln(Future value / Present value) / ln(1 + Rate) Future value = $168,000 Present value =…

Q: Why should long-term investments have to be financed by long-term sources of funds? (Atleast 5…

A: A long-term investment is one that a corporation plans to keep for at least a year, such as stocks,…

Q: You need to accumulate $10,000. To do so, you plan to make deposits of $1,450 per year - with the…

A: Future value of an annuity can be calculated as: = Annuity payment * FVAF (i%, n years)

Q: onomy eserve ratio is 40%. Suppose Mark sells 50 worth of government securities to the FED and…

A: Out of deposit made some amount is maintained as reserve and remaining amount is used by Banks for…

Q: 4.4 ROE decomposition 2021 Tax Effect Financial Cost Effect Operating Margin…

A: ROE: It is a measure of profitability and is estimated by dividing the net income by the equity…

Q: e that a friend tells you that you should not rush to pay off your mortgage early because you will…

A: Mortgages are paid by equal amounts of monthly payment that carry the payment of principal amount…

Q: The following data were taken from the financial statements of Tokyo Corporation: Annual Sales -…

A: Inventory is part of current assets as it can be converted into cash in a short time period.…

Q: are these premium for discount bonds? What is the price of the bonds?

A: Bond valuation refers to a method which is used to compute the current value or present value (PV)…

Q: The principle of gearing 2. Why debt is cheaper than equity 3. What the effect will be on the risk…

A: Gearing is the debt-to-equity relationship or ratio of a firm. Gearing indicates how much of a…

Q: Blues, Inc., is a itional corporation (MNC) located in the lues would like to estimate its weighted…

A: Weighted average cost of capital is weighted considering the weight of bond and weight of equity of…

Q: A. Complete the information below using Ordinary Simple Annuity. 1. R=P900 An = Sn = P11,504.14 t=…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: Your employer will give you a raise in an annual salary of $10,000 if you pass a Professional…

A: We will apply the required formula to calculate the PV of the raise as the period is 35 we will take…

Q: Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req…

A: 1. Payback Period is the length of time required to recover the cost of Investment. (a) When Cash…

Q: corporation,dividend,limited liability,over-the counter market,stock exchange and stock market index

A: In finance we often hear the words corporation, dividends, limited liability etc. These are all…

Q: Calculate the future value of an ordinary annuity consisting of monthly payments of $450 for five…

A: An ordinary annuity is an annuity where the periodic payment occurs at the end of the period.

Q: L A Moving to another question will save this response. Question 9 A project has sales of $600,000,…

A: Since you have asked multiple questions, we will solve the first question as per policy. Please ask…

Q: The Morrit Corporation has $480,000 of debt outstanding, and it pays an interest rate of 8%…

A: The times' interest earned ratio: The times' interest earned ratio is a measure of a firm's ability…

Q: Ten years ago, you deposited P5400 per month. You made the deposit for 6 years and then stopped. 4…

A: Calculations are done in excel so there is no intermediate rounding effective monthly interest rate…

Q: Two statements are given below about Marketable Securities: Statement 1: Marketable securities does…

A: Solution:- Marketable securities are the short term form of financial instrument to invest in, such…

Q: urchasing equipment for $150,000 (7yr MACRS property). The estimated useful life of the equipment…

A: MACRS is modified accelerated depreciation in which there is more depreciation during the initial…

Q: Smiling Elephant, Inc., has an issue of preferred stock outstanding that pays a $5.30 dividend every…

A: The dividend discount model states that the share price can be calculated by adding up the…

Q: Spherical Manufacturing recently spent $11 million to purchase some equipment used in the…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: An investor is considering purchasing an office building for $5 million with the intention of…

A: The net present value method is used to check the profitability of a project by adding up discounted…

Q: Fowler, Inc., just paid a dividend of $3.20 per share on its stock. The dividends are expected to…

A: The dividend discount model is used to find the current price by finding the present value of the…

Q: Assume Coleco pays an annual dividend of $1.90 and has a share price of $38.00. It announces that…

A: Existing dividend = $1.90 Existing stock price = $38.00 New dividend = $2.20

Q: Using a spreadsheet generate your own set of Discount and Annuity Tables for, say, all discount…

A: Discount Factor: It is the factor used to ascertain what the benefit of getting $1 sooner or later…

Q: Suppose a company in the E-commerce industry is expected to pay a dividend of $0.28 per share wit…

A: Present value of growth opportunity is present value of growth opportunity considering interest and…

Q: 2. Mr. Reis has these daily balances on his credit card for his last billing period. He did not pay…

A: Average daily balance is the average of the monthly expenses. The total balance is calculated by…

Q: 3. Calculate the APR for a 6% per annum nominal rate of interest that is compounded (a) 4 times per…

A: The annual percentage rate is used to calculate the actual return over the course of a period. It…

Q: which is also its expected return on new investment; this is expected to continue forever. What do…

A: The Current market price per share is calculated using Gorden's Model. The Current Stock price is…

Q: A loan was to be amortized by a group of four end-of-year payments. The initial payment was to be…

A: Here, Annual Payment is P5,350 Increase in Annual Payment is P620 Number of Payments is 4 Interest…

Q: An initial $300 compounded for 10 years at 4%. $ An initial $300 compounded for 10 years at 8%.…

A: Future value = Present value*(1+interest rate)^n Present value = Future value/(1+interest rate)^n

Q: Portfolio diversification does not affect the variability of returns of an individual stock held in…

A: True. Portfolio diversification does not affect the variability of returns of an individual stock…

Q: 5. What principal (present value) invested for 3 years at 10% compoun total future value of P4,000?…

A: The present value is the equivalent value today of the future cash flow considering the interest and…

Q: Calvin Johnson has a $5,500 debt balance on his Visa card that charges 12.2 percent APR compounded…

A: Given that: Interest rate = 12.2% annually periodic payment (pmt)=$220 present value= $5500 future…

Q: Calculating present values Calculate the present value of each of the following cash flow streams.…

A: Since you have posted a question with multiple subparts, we will solve first three sub parts for…

Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

17.

Use graphical approximation techniques or an equation solver to approximate the desired interest rate. A person makes annual payments of $1000 into an ordinary
annuity. At the end of 5 years, the amount in the annuity is $5759.93. What annual nominal compounding rate has this annuity earned?
Type the interest rate: %
(Round to 2 decimal places.)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1 Given

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
Calculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?
Define the stated (quoted) or nominal rate INOM as well as the periodic rate IPER. Will the future value be larger or smaller if we compound an initial amount more often than annually—for example, every 6 months, or semiannually—holding the stated interest rate constant? Why? What is the future value of $100 after 5 years under 12% annual compounding? Semiannual compounding? Quarterly compounding? Monthly compounding? Daily compounding? What is the effective annual rate (EAR or EFF%)? What is the EFF% for a nominal rate of 12%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily?
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?