A sum of $100,000 was invested into an account for six months. An amount equal to $120,000 was received every six months. If interest is compounded continuously, compute the nominal rate of interest and the effective rate of interest.

Q: A debt of $10,000 with interest at 8% compounded quarterly is to be repaid by equal payments at the…

A: The formula we will be using is P = PMT*((1-(1/(1+r)^n))/r) Where, P is the present value of the…

Q: debt of $9179.58 is repaid by payments of $1797.52 in 4 months, $1295.22 in 16 months, and a final…

A: The final payment in a debt refers to the last payment made by the borrower to the lender, which…

Q: Assume $300 is deposited every three years into an account earning an annual effective interest rate…

A: A sum of money is worth more now than it will be at a later time due to its potential for profits in…

Q: Determine the interest earned after 10 years if $200 is invested in each of the following accounts:…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: 4. If $2,000 is invested in an account that earns 8.5% interest compounded annually for 5 years,…

A: Interest refers to the cost of borrowing funds or money from other parties. Interest usually is of…

Q: A debt of $9179.58 is repaid by payments of $1797.52 in 4 months, $1295.22 in 16 months, and a final…

A: Given: Loan amount “L” = $9179.58 Payment in 4th month "P1"= $1797.52 Payment in 16th month "P2"=…

Q: Sue Li deposited $200.00 into a savings account that compounded interest semi-annually. What nominal…

A: compound = semiannually = 2 Present value = pv = $200 Future value = fv = 585.30 Time = t = 3 * 2 =…

Q: Sixty monthly deposits are made into an account paying 6% nominal interest compounded monthly. If…

A: FV of annuity = P * [(1+r)^n-1] / r Where, P = amount of each deposit r = rate of interest per…

Q: n initial amount of 1400$ is invested in an account at an interest rate of 9% per year, compounded…

A: In finance we use the concept of time value of money to compute future values and present values.…

Q: Calculate the amount of money that must be deposited at the end of every three months into an…

A: Quarterly deposit refers to an amount that is deposited every quarter for the purpose of saving for…

Q: A loan of $12,068 was repaid at the end of 16 months. What size repayment check (principal and…

A: To calculate the repayment amount for a loan with interest, use the following formula :where:A is…

Q: 1.Calculate the compound amount when $4000 is deposited in an account earning 6% interest,…

A: The Future Value of the annuity is the Future worth of a cash flow series at a certain rate of…

Q: An amount of $105,650 was accumulated after 10 years of payments of $2,024.15 at the beginning of…

A: An annuity is a series of payments provided in exchange for a lump sum payment. It is widely used in…

Q: Over a period of nine months, $35.67 of simple interest is earned at 1.75% per quarter. Calculate…

A: Principal is the amount which is initially invested in the project. It is the amount with which…

Q: Determine the value at the end of five years of a $7,000 investment (today) in a bank certificate of…

A: Future Value = Present Value * (1+rate)^n Where, Rate = 9%/2 = 0.045 n = no. of compounding period =…

Q: final amount of money in the account if $1200 is deposited at

A: Compounding quarterly can be considered as the interest amount which is earned quarterly on an…

Q: Determine the interest rate per compounding period as a decimal. Time of payment every 6 months.…

A:

Q: $7000 are invested in a bank account at an interest rate of 6 percent per year. Find the amount in…

A: Here,

Q: Complete the table for an account in which interest is compounded continuously. (Round your answers…

A: This is a case of continuous compounding. We will have to convert the given rate to the EAR…

Q: What nominal rate of interest, compounded quarterly

A: To calculate the nominal rate of interest compounded quarterly over the first ten years, we need to…

Q: An investment of $1831.00 earned interest semi-annually. If the balance after 5.5 years was…

A: Using excel RATE function

Q: A bank makes payments continuously at a rate of $270 per year. The payments are made between times 7…

A: Present value of $270 received in year 7 at time 3 is = $270 / (1+6%)^(7-3)= $270 / (1.06)^4= $270 *…

Q: A loan of $14,865 was repaid at the end of 7 months. What size repayment check​ (principal and​…

A: Given, Loan amount $14865 term is 7 months Annual rate is 8%

Q: $600.00 was invested in a bank for 5 years. When the deposit was made, the bank was paying the 14%…

A: Invested amount (P) = $ 600 Interest rate for first 3.5 years = 14% Quarterly interest rate (r) =…

Q: Payments of $1000 each are made at the end of every year for 6 years to a savings account. Calculate…

A: Future value is an estimate of future cash flows ​​that may be received at a future date, discounted…

Q: Five years ago, $12, 000 was deposited into a savings account that provides an interest of 6.5%…

A: A savings account is a deposit account opened with banks and other financial institutions. The…

Q: Calculate the effective rate (APY) of interest for 1 year. The principal is $15,500 with an interest…

A: Interest rate = r = 12%Compound = n = Quarterly = 4

Q: Twenty-five thousand dollars is deposited in a bank trust account that pays 3% interest, compounded…

A: Formula to calculate annual withdrawal is: W = A(F/A, i, n)

Q: 100 is deposited into an account at the end of each 3-year period for 36 years. The accumulated…

A: Annual effective rate is the real rate at which the money deposited grows.

Q: Calculate the initial amount that would be in a savings account at the beginning of 6 years, given a…

A: Given  Interest rate =  3.14% Number of years = 6 Years Final amount received = 256 Future value is…

Q: A debt of $6436.51 is repaid by payments of $1707.02 in 3 months, $1233.91 in 13 months, and a final…

A: Given variables in the question:Debt=$6436.51Payment details:In 3 months=$1707.02In 13…

Q: Find the accumulated value of payments which total 640 per year paid in equal installments at the…

A: We need to use future value of ordinary annuity formula to calculate amount accumulated after 5…

Q: Start with a $1,000 deposit and assume a reserve requirement of 15 percent. Trace the amount of…

A: Lending cycles refer to the recurring patterns in a financial institution's willingness to extend…

Q: James made an initial deposit into an account of $1,000 at time t = 0, followed by five annual…

A: Present Value(PV) refers to current value of amount that is to be paid or received in future. It is…

Q: Determine the effective rate for $1 invested for 1 year at 7.8% compounded quarterly. The effective…

A: The effective interest rate can be defined as the interset that will be computed using the nominal…

Q: At the start of this year, $10,000 was deposited into an account that earns an effective annual…

A: The FV of the payment series refers to the value of the cash flows at a fixed future date assuming…

Q: Four hundred dollars is deposited into an account that compounds interest quarterly. After 10…

A: Formula to calculate rate of interest in compound interest: r = n[(A/P)^1/nt - 1] Where r is the…

Q: Use the compound interest formula to compute the balance in the following account after the stated…

A: We need to use compound interest formula to calculate balance in the account after 14 years A…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.