How did you get the 0.1212 or 12.12% value from this problem? Find the nominal rate which if converted quarterly could be used instead of 12% compoundedmonthly. What is the corresponding effective rate?SolutionLet r = the unknown nominal rate***For two or more nominal rate rates to be equivalent, their corresponding effective rates must beequalNominal rateEffective rater% compounded quarterly(1 + 4)4 - 112% compounded monthly(1 + 2 12 -1Equating both,(1 + 4)ª - 1 = (1+ 12 -10.12(1 + 12) 12 -1%3DSimplifying,r = 0.1212 or 12.12% compounded quarterly

Given information : Interest rate = 12% Compounding period = 12 Since the question have not…

Answered: How did you get the 0.1212 or 12.12%…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Attempt History Current Attempt in Progress Wildhorse Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment: Cost Old Equipment Accumulated depreciation Remaining life Current salvage value Salvage value in 8 years Annual cash operating costs $80,240 $40,300 8 years $9,920 $0 $35,100 Cost New Equipment Estimated useful life Salvage value in 8 years Annual cash operating costs $38,000 8 years $4,800 $29,900 Depreciation is $10,030 per year for the old equipment. The straight-line depreciation method would be used for the new equipment over an eight-year period with salvage value of $4,800.
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You can use the above formula to answer questions here I think its epr finding not totally sure If the stated annual rate of interest compounded semi-annually is 12.5% then what is the equivalent: a) Semi-annual rate compounded semi-annually b) Annual rate compounded quarterly c) Annual rate compounded continuously d) 30 day rate compounded every 30 days e) Annual rate compounded weekly (use n = 7/365)

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