FUNDAMENTALS OF ACCT. W/CONNECT >LL<
5th Edition
ISBN: 9781259701061
Author: PHILLIPS
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
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Chapter C, Problem 10MC
To determine
To Explain: The procedure to adjust the number of years and annual interest rate, if the interest is compounded quarterly rather than yearly.
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For each of the following cases, indicate (a) to what rate columns, and (b) to what number of periods you would refer in looking up the interest factor.1. In a future value of 1 table:
Annual Rate
Number of Years Invested
Compounded
(a) Rate of Interest
(b) Number of Periods
a.
11%
10
Annually
enter percentages
%
enter the number of periods
b.
8%
8
Quarterly
enter percentages
%
enter the number of periods
c.
10%
19
Semiannually
enter percentages
%
enter the number of periods
2. In a present value of an annuity of 1 table: (Round answers to 1 decimal place, e.g. 458,58.1.)
Annual Rate
Number of Years Invested
Number of Rents Involved
Frequency of Rents
(a) Rate of Interest
(b) Number of Periods
a.
12%
30
30
Annually
enter percentages
%
enter the number of periods
b.
11%
16
32
Semiannually
enter percentages
%
enter the number…
For the following exercise, use the compound interest formula,
A(t) = P
1 +
r
n
nt
,
where money is measured in dollars.After a certain number of years, the value of an investment account is represented by the expression
10,950
1 +
0.03
2
24
.
How many years had the account been accumulating interest? yr
For each of the following cases, indicate (a) to what interest rate columns and (b) to what number of periods you would refer in looking up the future value factor. (Round percentages to 2 decimal places, e.g. 5,275.)(1) In Table 1 (future value of 1):
Annual Rate
Number ofYears Invested
Compounded
Case A
4%
3
Annually
Case B
9%
5
Semiannually
(a)
(b)
Case A
%
periods
Case B
%
periods
(2) In Table 2 (future value of an annuity of 1):
Annual Rate
Number ofYears Invested
Compounded
Case A
6%
5
Annually
Case B
12%
6
Semiannually
(a)
(b)
Case A
%
periods
Case B
%
periods
Chapter C Solutions
FUNDAMENTALS OF ACCT. W/CONNECT >LL<
Ch. C - Prob. 1QCh. C - Prob. 2QCh. C - Which of the following is most likely to be an...Ch. C - Prob. 4QCh. C - Prob. 5QCh. C - Prob. 6QCh. C - Prob. 7QCh. C - You are saving up for a Mercedes-Benz SLR McLaren,...Ch. C - Prob. 2MCCh. C - Prob. 3MC
Ch. C - Prob. 4MCCh. C - Prob. 5MCCh. C - Assume you bought a car using a loan that requires...Ch. C - Assume you bought a car using a loan that requires...Ch. C - Which of the following statements is true? a. When...Ch. C - Prob. 9MCCh. C - Prob. 10MCCh. C - Prob. 1MECh. C - Prob. 2MECh. C - Prob. 3MECh. C - Prob. 4MECh. C - Prob. 5MECh. C - Prob. 6MECh. C - Prob. 7MECh. C - Prob. 8MECh. C - Prob. 9MECh. C - Prob. 10MECh. C - Prob. 11MECh. C - Prob. 12MECh. C - Prob. 1ECh. C - Prob. 2ECh. C - Prob. 3ECh. C - Prob. 4ECh. C - Prob. 5ECh. C - Computing Bond Issue Proceeds and Issue Price Your...Ch. C - Computing Missing Present or Future Values...Ch. C - Prob. 1CPCh. C - Prob. 2CPCh. C - Prob. 3CPCh. C - Prob. 4CPCh. C - Prob. 1PACh. C - Recording Equipment Purchase with Two-Year Note...Ch. C - Prob. 3PACh. C - Prob. 4PACh. C - Prob. 1PBCh. C - Recording Equipment Purchase with Two-Year Note...Ch. C - Prob. 3PBCh. C - Prob. 4PB
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Similar questions
- Say you own an asset that had a total return last year of 17 percent. Assume the inflation rate last year was 4.8 percent. What was your real return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)arrow_forwardSuppose you invest $1,500 in an account paying 6% interest per year. How much of this balance corresponds to interest on interest earned in the last (7th) period? (Dollar figures should be approximated to the nearest cent of a dollar, while rates should be expressed in percentage terms without using the "%" symbol and approximated to the nearest second decimal place.)arrow_forwardFor each of the following cases, indicate (a) to what interest rate columns and (b) what number of periods you would refer to in looking up the future value factor. (1) In Table 1 (future value of 1): \table||,Annual Rate, \table[[Number of], [Years Invested]], Compounded], [Case A,5%,5, Annually], [Case 8,8%, 4, Semiannually]]\ table[(a)..(b)], [Case A,%, periods,], [Case B,%, periods,,]] (2) In Table 2 (future value of an annuity of 1): \ table[],Annual Rate,\table[[Number of], [Years Invested]], Compounded], [Case A,4%, 12, Annually), (Case B,6%, 5,Semiannually]] \table[[,(a), (b)].[..%,periods], [Case A,%, periods,]]arrow_forward
- 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)arrow_forwardAssume the interest is 8% compounded quarterly. a)Find the quarterly effective interest rate for 8% compounded quarterly. (b) Find the future value at the end of the 8th quarter of the cash flows identified at the end of quarter 4 and quarter 8. (c) Find the end of quarter deposits, A, that are equivalent to the future value you calculated in part b.arrow_forwardConsider an account with an APR of 6.2 % Determine the APY percentage for quarterly monthly and daily compounding interest how does increasing the number of compounding periods increase or decrease the annual yieldarrow_forward
- Investment Analysis The effective rate of interest can be calculated using the formula reff = 1 + r m m − 1 where reff is the effective rate of interest, r is the nominal interest rate per year, and m is the number of conversion periods per year. Find the nominal interest rate that, when compounded monthly, yields an effective interest rate of 3%/year. (Round your answer to two decimal places.)arrow_forwardPercentages need to be entered in decimal format, for instance 3% would be entered as .03 in the interest rate cells.) Suppose your opportunity cost (interest rate/year) is 11% compounded annually. How much must you deposit in an account today if you want to pay yourself $230 at the end of each of the next 15 years? How much must you deposit if you want to pay yourself $230 at the beginning of each of the next 15 years? Bruce invested $1,250 (present value - enter as a negative number) 10 years ago. Today, the investment is worth $3,550 (future value). If interest is compounded annually, what annual rate of return did Bruce earn on his investment? (Use Solving for r - Rate of Return- on a Lump Sum) Mario wants to take a trip that costs $4,750 (future value), but currently he only has $2,260 (present value - enter as a negative number) saved. If Mario invests this money at 7% compounded annually, how long will it take for his investment to grow to the needed amount of…arrow_forwardComplete the following using compound future value. Time 2 years, Principal $15,000, Rate 8%, Compounded quarterly. What is the amount? What is the interest?arrow_forward
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