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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Based on the following annual interest rates, what is the interest rate per period and the frequency of compounding per year in each of the following?

  1. a. 18% compounded semiannually
  2. b. 16% compounded quarterly
  3. c. 15% compounded monthly

To determine

Determine the interest rate per period and the frequency of compounding per year for each of the given situation.

Explanation

Interest:

Interest is the cost of borrowing money, in other words Interest is the amount charged on the principal value of the money borrowed for the privilege of borrowing money. Interest is to be paid by the borrower and to be received by the lender.

a.18% compounded semi annually

Interest rate per period = 18%2=9%

Frequency of compounding per year = 2 times

b

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