you were offered either a simple interest note or a simple discount note with the following terms: $21,399 at 8% for 36 months. calculate the effective interest rate. (do not round intermediate calculations. round your final answer to the nearest tenth percent.): Effective interest rate: ??

you were offered either a simple interest note or a simple discount note with the following terms: $21,399 at 8% for 36 months. calculate the effective interest rate. (do not round intermediate calculations. round your final answer to the nearest tenth percent.): Effective interest rate: ??

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter16: Interest, Rent, And Profit

Section: Chapter Questions

Problem 1WNG

See similar textbooks

Related questions

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: Two bonds have identical times to maturity, face value, and coupon rates. The current price of the…

A: The issuer of a callable bond has the option to call the bond before its maturity date. The issuer…

Q: Assume that a bond has a face value of $250,000. It has a maturity of 1 year and the coupon rate of…

A: Here we calculate the yield maturity by using the given information , so calculation as follow-

Q: What is the simple interest rate applied if an investment of P17,660 accumulates to P23,605 in the…

A: Present value is P17660 and future value is P23605 Present value is invested for 6 years at interest…

Q: If a bank offers an investment opportunity for which the interest is compounded quarterly, and you…

A: The nominal interest rate alludes to the financing cost prior to considering expansion. nominal can…

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: (Calculating the present value of an annuity due) What will be the present value of annuity due of…

A: The present value of an annuity is the current value of future payments from an annuity, given 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: 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: Real interest rates can be negative. True False

A: The real interest rate is the inflation adjusted interest rate. That is, inflation implies that real…

Q: For this question, assume that the interest rate is greater than 0. Given this information and the…

A: Answer: Let us first calculate the present values of X, Y, and Z: Note: Suppose the interest rate is…

Q: What is the yield on a CD with an 5.5 percent rate, 180 days to maturity when initially issued, and…

A: Given: Yield on CD=5.5%Number of days to maturity=180

Q: If the price of a one year T-Bill is $2,860 and the value at maturity is $3,000, what would be the…

A: Yield to maturity is given as = (Face value/current value)1/years to maturity - 1 Face value= $3000…

Q: You are considering taking out a two-year loan of$1,000 from a bank, on which you can pay…

A: Case 1 : Compound yearly interest Principal (P) = $1,000 Interest rate (r) = 1% Time period (t) = 2…

Q: 2.0%? b) Given the selling price from part (a), what was your annual rate of return from owning this…

A: The annual rate of return is the percentage change in the value of an investment. For example: If…

Q: A bond you are evaluating has a 10 percent coupon rate (compounded semiannually), a $ 1,000 face…

A: Given Bond face value = 1000 $ Time = 10 years Coupon rate = 10 % compounded semi annually Semi…

Q: To make CDs look more attractive as an investment than they really are, some banks advertise that…

A: We are going to find the compounding interest rate to answer this question. Note: As per Bartleby…

Q: Calculate the bond yield rate % for a bond with an actual interest payment of $200 and a market…

A: Bond yield is the return gain from the coupon payments of the bond to the inventor.

Q: If the face value of a 91-day Treasury Bill is £100000 and it is issued at a discount of £500, what…

A: * SOLUTION :-

Q: 59. HOUSING STARTS Suppose that in a certain community, there will be M(r) thousand new houses built…

A: Given that in a certain community, there will be thousand new houses built when the when the 30-year…

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

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

A: Answer -

Q: Let j be the compound interest rate for the t-year period from time s to time s + t, and let dj be…

A: As per the guidelines, I am suppose to solve 1 question at a time. Thank you.

Q: f a coupon bond has two years to maturity, a coupon rate of 8%, a par value of $1000, and a…

A: Answer: Given, Coupon rate = 8% Par value = $1000 Yield to maturity = 12% Calculation:…

Q: An investment promises to pay into an account that pays you 6 percent annually, $150 per month for…

A: $150 for one month Therefore for one year-150*12=1800 6% of 1800=108 Therefore 1800+108=1908

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: Suppose the interest rate is 10%. If $100 is invested at this rate today, how much will it be worth…

A: Today's $100 is not equal to two years after $100 due to Inflation and interest rate . And this…

Q: Suppose you purchase a $10,000 face value zero-coupon bond and hold it to maturity, a term of 10…

A: Face value = 10000 $ Time = 10 Years Current price = 8072 YTM = (10000 / 8072)^1/10 – 1 * 100 = 2.16…

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: If the face value of a 91-day Treasury Bill is £100000 and it is issued at a discount of £2300, what…

A: Discount rate =(F-M)F×365tM=Market value of bill=100000-2300=97700F=Face valuet=Days until…

Q: You are a Vice President of Finance for a small waste disposal company who has just been fined…

A: Answer; option (3) is the right answer.

Q: return

A: Answer

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: The only kind of interest rate that can be used in the interest formulas is: A simple rate A nominal…

A: Simple Interest:- This is a way for estimating the level of interest imposed on an amount over a…

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: Suppose that you are considering subscribing to “ABC” magazine. The magazine is advertising a…

A: For the comparison of both the given plan we have to draw a cash-flow diagram and after than…

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: Suppose you think if you were to retire right now, you would have needed $50,000 each year to…

A: The figures for the actual amount of money that inflation can cost seniors are staggering. The LIMRA…

Q: The interest rate compounded on any pay period is called the nominal interest rate Select one: O…

A: Nominal interest rate refers to the interest rate in the economy without adjusting the inflation…

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

Q: A businessman borrows money of $ 200,000 from the bank to be repaid in three years by a single…

A: Here, it is given that a specific amount of money is borrowed for three years at 12% interest rate.…

Q: What is the present value of $500.00 to be paid in two years if the interest rate is 4%? $…

A: Present Value (PV) is given by the formula: PV = FV(1+r)n Given: FV=500, r=0.04, n=2

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.

Q: invest today in order to withdraw ₱ 14,766 annually for6 years if the interest rate is 2.24% if…

A: *Answer: Given information, Annual amount (A): ₱ 14766 Time period (N): 6 years Interest rate…

Question

Effective interest rate: ??

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

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Similar questions

Consider a $1200 bond that makes $30 annual coupon payments. If the interest rate is 2 percent and the bond matures in two years, what is the bond's present value? Carefully follow all mathematical instructions. Round intermediate steps to four decimal places and your final answer to two decimal places.
Jack’s Lock and Key are considering remodeling. It estimates that the remodeling will cost $6,000 and that as a result revenues will rise by $3,000 the first year, $2,500 the second year, $1,500 the third year, and have no effect after then. If the interest rate is 5%, should Jack’s remodel? Defend your answer by showing your work.
Is it possible for a one-year coupon bond to have a negative nominal interest rate? Explain, how?
What is the simple interest rate applied if an investment of P17,660 accumulates to P23,605 in the period of 6 years? Write your answer in two decimal places.
Making the assumption of no compounding interest , suppose you purchase a perpetuity bond from CosoNostra Pizza Inc. for $ 4,000 with an annual coupon rate of 3 % . Specify all answers to the nearest dollar , and assume a discount rate equal to that of the current interest rate . Changes in the economy push interest rates up from 3 % to 5 % . For how much can you sell your bond following this change in market interest rates ?
Suppose 6-month Treasury bills are trading at a YTM of 1.6%, 12-month T-bills are trading at a YTM of 2.9%. If 18-month Treasury notes with a coupon rate of 3% are trading at par ($100), then what is the 18-month spot rate?
A bond with a face value of $1,000 has 8 years until maturity, has a coupon rate of 8%, and sells for $1,100. What is the yield to maturity if interest is paid once a year? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places. What is the yield to maturity if interest is paid semiannually? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.
Suppose that you are considering subscribing to “ABC” magazine. The magazine is advertising a one-year subscription for $60 or a three-year subscription for $166. You plan to keep getting the magazine for at least three years. The advertisement says that a three-year subscription saves you $14 compared to buying three successive one-year subscriptions. If the interest rate is 10%, should you subscribe for one year or for three years? (Assume that one year from now a one-year subscription will still be $60.)
Calculate the net present value of a business deal that costs $2,500 today and will return $1,500 at the end of this year and $1,700 at the end of the following year. Use an interest rate of 13%.
If the price of a one year T-Bill is $2,860 and the value at maturity is $3,000, what would be the yield(interest rate)?
A lottery claims its grand prize is $20 million, payable over four years at $4,000,000 per year. If the first payment is made immediately, and the next 4 payments at the end of year 1, year 2, year 3 and year 4, what is this grand prize really worth? Use an interest rate of 8%.
You are purchasing a 20-year, zero-coupon bond. The yield to maturity is 9.76 percent and the face value is $1,000. What is the current market price? Assume a semiannual interest rate payment.