Given the anticipated rate of inflation (i) of 2.13% and the real rate of interest (R) of 3.1%, find the nominal rate of interest (r). Mathematical procedure needed

Q: Under which situation is the simple rate equal to the effective annual rate, and under which…

A: Simple interest is a linear function of time since it is computed on the initial principal amount…

Q: What is Simple Annuity? (payment interval, and interest period, time of payment, duration)

A: Given Simple annuity Payment interval Interest period Time of payment  Duration…

Q: What would cause the annual interest rate to be different from the annual effective rate or yield?

A: Effective Interest Rate: The fixed rate applied to carrying value of the bonds to calculate the…

Q: Explain quoted interest rate

A: Quoted interest rate: It is other ways known as nominal interest rate or annual percentage rate and…

Q: The difference between the nominal interest rate and the effectiveinterest rate.

A: The nominal interest rate is the interest rate paid annually without compounding period.  The…

Q: The present value of a lump sum future amount: O A. increases as the interest rate decreases. O B.…

A: The present value is defined as the discounted amount of the expected future value. The current…

Q: Define effective annual rate (EAR) with examples. Differentiate between annuity cash flows and mixed…

A: Nominal interest rate (annual interest rate) is the annual rate without effect of compounding.

Q: The formula in getting the compound interest given the present value and maturity value is…

A: Compound interest : Compound interest can be understood as the transfer of interest, or, in specific…

Q: Explain how the present value of an ordinary annuityinterest table is converted to the present value…

A:

Q: direct and indirect relationships between balance of payment and inflation rate.

A:

Q: RMU

A: We need to compute the future price of machine after 8 years and then shall compute the amount to be…

Q: What is the rela1ionship between Annual  Percentage Rate and the interest period?

A: Answer: Annual percentage rate represents the interest rate which also takes additional payments…

Q: Identify some macroeconomic factors that influence interest rates and explain theeffects of each.

A: Following are the macroeconomic factors that influence interest rates: GDP An ascent in GDP will…

Q: Present Value $ 520.09 $17,860.63 $35,214.61 $26,885.08 Future Value $ 1,808.74 $234,978.49 $…

A: The money's time value concept indicates a fact that reveals that any sum's current worth is more…

Q: The nominal rate equals the real rate plus the inflation rate. True False

A: Nominal interest rate sometimes is also called as stated interest rate.

Q: please use a specific example to compare what is the discount rate% and what is the investment rate…

A: Explanation:-   Discount rate % on treasury bills: The income generated on the T-bill is equal to…

Q: Illustrate the very important relationships between changes in interest rates and varying rates of…

A: It illustrates an inverse relationship amongst the change in the interest rate and the varying…

Q: Write an equation for determining the value of the series of end-of-period payments?

A: Formula:

Q: Fisher effect defines the relationship between nominal rates, real rates, inflation, default…

A: Fischer effect- It is named after economist Irving Fischer.

Q: 1)What is '''effective annual interest rate"? 2) Explain it by numerical examples

A: There are two types of interest rate Nominal Interest Rate and Effective Interest Rate The effective…

Q: The discount rate is the combination of what two types of discounting?   a. exponential and linear…

A: Discount rates are used for discounting the future cash flows. It helps in determining the time…

Q: Explain the addition to the interest rate, HELOC borrowers consider the issues?

A: Home buyers mostly take loans to buy the home and they will pay the debt in equated installments.…

Q: What security provides a good estimate of the long-term nominalrisk-free rate?

A: Risk-free Rate is the estimation of the rate that is earned on the securities or the investments…

Q: is there a way of computation for both interest (simple and compound) that you could paid the total…

A: Simple interest is calculated on the loan or deposit's principal amount, whereas compound interest…

Q: Describe the process of using the risk-adjusted discount rateto calculate the net present value?

A: Net present value (NPV) is the excess of present value of cash inflows over the present value of…

Q: How can we determine the Net Present-Worth Amounts at Varying Interest Rates?

A: Answer: Net present worth is an estimation method applied to various time intervals when cash flows…

Q: The formula for calculating the discount rate to use in net present value (NPV) calculations is as…

A: Present value is the discounted value of the amount of future value. Discount rate is calculated…

Q: Time value of money calculations can be solved using a mathematical equation, a financial…

A: To calculate the future value of an annuity due, you can use the following formula:FV = PMT x {[(1 +…

Q: O discounting factor. O number of periods. O compounding factor. O interest rate. cash flow is…

A: Present value is the equivalent value of the future cash flow based on the time value of money and…

Q: Ayield curve states that the long-term interest rate is higher than the short-term interest rates.

A: A Yield Curve, also commonly referred to as "The Term Structure of Interest Rates", depicts the…

Q: The real rate of return is related to O The risk-free rate The risk-free and the inflation rate The…

A: Real rate of returnAn annual profit percentage that is earned on the investment, being adjusted for…

Interest Rate

When you deposit your money with the bank, the deposit earns you some extra money at the end of the specific period – something more than what you deposited. That amount of money that the bank pays you for keeping the money with the bank is the “interest” and the percentage at which the bank pays you for your amount is called the “interest rate”.