Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781337091985
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 9.1, Problem 1QQ
To determine
The present value of money.
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6. Alex invested a certain amount to a business and promised to pay him back with 1.8 times his original investment. They agreed to have it compounded monthly within 9 years. What is the nominal rate of interest r in percent?
A bank pays one percent interest on savings account four times a year. What is the actual annual interest rate?
how to calculate present value
Chapter 9 Solutions
Brief Principles of Macroeconomics (MindTap Course List)
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- You have two investments to choose from. Investment A pays an interest rate of 5% for 2 years and Investment B pays an interest rate of 2% for 5 years. Given that you have $100 to invest and can only choose from investment A or B, Which one should you choose?arrow_forwardAnnuity Suppose that you are thinking of buying a car that yields a rental of $5,000 each year for 3 years and then can be sold for scrap value of $8,000. With an interest rate of 10 percent, how much would we be willing to pay?arrow_forwardcould you show how to determine the bond's present value without a calculator?arrow_forward
- You can invest in an account that pays simple interest or an account that pays compound interest. In either case, you plan to invest $2,900 today and both accounts have an annual interest rate of 8 percent. How much more interest will you receive in the 11th year in the account that pays compound interest?arrow_forwardGreg wants to have $50 000 in five years. He has $20 000 today to invest. The bank is offering five-year investment certificates that pay interest compounded quarterly. What is the minimum nominal interest rate he would have to receive to reach his goal?arrow_forwardSuppose that you saved $4,700 at the beginning of the year and that at the end of the year your savings account has $6,100 in it. What interest rate did you earn?arrow_forward
- MULTIPLE-CHOICE QUESTION How does compounding interest help you grow wealth over time? because your contributions to investment accounts grow steadily O because interest rates always increase over time O because interest payments are continually added to the principalarrow_forwardThe present value of a perpetuity paying $20 at the end of every four years is $43. Find i.arrow_forwardWhat is Effective interest?arrow_forward
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