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- Question
For a nominal interest rate of 8.4%, what is the compounding frequency if the periodic interest rate is:2.1
Options- A. 1
- B. 2
- C. 3
- D. 4
- Correct Answer
- 4
Explanationi=j/m
- 1. For a nominal interest rate of 8.4%, what is the compounding frequency if the periodic interest rate is 8.4
Options- A. 1
- B. 2
- C. 3
- D. 4 Discuss
- 2. For a nominal interest rate of 8.4%, what is the compounding frequency if the periodic interest rate is 4.2
Options- A. 1
- B. 2
- C. 3
- D. 4 Discuss
- 3. Calculate the periodic interest rate corresponding to 9.5% compounded monthly
Options- A. 0.7916
- B. 0.8916
- C. 0.9916
- D. 0.6916 Discuss
- 4. Calculate the periodic interest rate corresponding to:9.0% compounded quarterly
Options- A. 3.45
- B. 2.25
- C. 5.25
- D. 6.25 Discuss
- 5. A loan is made for $4800 with an APR of 12% and payments made monthly for 24 months. What is the payment amount? What is the finance charge?
Options- A. 622.80
- B. 522.80
- C. 322.80
- D. 632.80 Discuss
- 6. For a nominal interest rate of 8.4%, what is the compounding frequency if the periodic interest rate is:0.7
Options- A. 9
- B. 10
- C. 11
- D. 12 Discuss
- 7. Determine the nominal rate of interest if: The periodic rate is 0.83% per month
Options- A. 7%
- B. 8%
- C. 9%
- D. 10% Discuss
- 8. Other things being equal, would an investor prefer an interest rate of 10.5% compounded monthly or 11% compounded annually for a two-year investment?
Options- A. 1232
- B. 1243
- C. 1254
- D. 1262 Discuss
- 9. If an investment can earn 4% compounded monthly, what amount must you invest now in order to accumulate $10,000 after 3 years?
Options- A. 8695.61
- B. 6786
- C. 3478
- D. 4092 Discuss
- 10. Kramer borrowed $4000 from George at an interest rate of 7% compounded semiannually. The loan is to be repaid by three payments. The first payment, $1000, is due two years after the date of the loan. The second and third payments are due three and five years, respectively, after the initial loan. Calculate the amounts of the second and third payments if the second payment is to be twice the size of the third payment.
Options- A. 1389
- B. 1359
- C. 1379
- D. 1339.33 Discuss
Compound Interest problems
Search Results
Correct Answer: 1
Explanation:
m=j/i
Correct Answer: 2
Explanation:
i=j/m
Correct Answer: 0.7916
Explanation:
i=j/m
Correct Answer: 2.25
Explanation:
i=j/m
Correct Answer: 622.80
Correct Answer: 12
Explanation:
i=j/m
Correct Answer: 10%
Explanation:
j=mi
Correct Answer: 1232
Explanation:
i=j/m
FV= PV(1+ i)^n
Correct Answer: 8695.61
Explanation:
i=j/m
PV = FV (1+ i)^-n
Correct Answer: 1339.33
Explanation:
Given:j=7% compounded semiannually making m=2 and i = j/m= 7%/2 = 3.5%
Let x represent the third payment. Then the second payment must be 2x.
PV1,PV2, andPV3 represent the present values of the first, second, and third payments.
Since the sum of the present values of all payments equals the original loan, then
PV1 + PV2 +PV3 =$4000 -------(1)
PV1 =FV/(1 + i)^n =$1000/(1.035)^4= $871.44
At first, we may be stumped as to how to proceed for
PV2 and PV3. Let?s think about the third payment of x dollars. We can compute the present value of just $1 from the x dollars
pv=1/(1.035)^10=0.7089188
PV2 =2x * 0.7089188 = 1.6270013x
PV3 =x * 0.7089188=0.7089188x
Now substitute these values into equation ? and solve for x.
$871.442 + 1.6270013x + 0.7089188x =$4000
2.3359201x =$3128.558
x=$1339.326
Kramer?s second payment will be 2($1339.326) =$2678.65, and the third payment will be $1339.33
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