Answer number 4 only 60 years.4.The amount of interest earned on K for one year is 243, while the equivalentamount of discount is 225. Determine K.5.Given that im)= 0.1488144 and dm)0.1417814, find m.6. (You are given a loan on which interest is charged over a 4-year period, as follows:i. an effective rate of discount of 6% for the first year;ii. a nominal rate of discount of 4% compounded quarterly for the secondyear;iii. a nominal rate of interest of 5% compounded semiannually for the third year; andiv. a force of interest of 5% for the fourth year.Calculate the annual effective rate of interest over the 4-year period.

Details of Ques-4: Amount of Interest Earned on K is 243 Amount of Discount on K is 225

Answered: 4. The amount of interest earned on K…

Business

Finance

4. The amount of interest earned on K for one year is 243, while the equivalent amount of discount is 225. Determine K.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

Answer number 4 only

60 years.
4.
The amount of interest earned on K for one year is 243, while the equivalent
amount of discount is 225. Determine K.
5.
Given that im)
= 0.1488144 and dm)
0.1417814, find m.
6. (
You are given a loan on which interest is charged over a 4-year period, as follows:
i. an effective rate of discount of 6% for the first year;
ii. a nominal rate of discount of 4% compounded quarterly for the second
year;
iii. a nominal rate of interest of 5% compounded semiannually for the third year; and
iv. a force of interest of 5% for the fourth year.
Calculate the annual effective rate of interest over the 4-year period.

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