Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Interst rate is 3.75% per year compounded quarterly.
What is the effective weekly rate?
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- I. Suppose that you start a savings account today with $ 265,000.00, from which you will make a single withdrawal for $ 180,000.00 within 15 months. Determine how much money you will have in the account in 3 years if the account pays interest as follows: In the first 6 months at a rate of 5% quarterly compounded continuously; in the next 9 months at an interest rate of 16% per annum compounded quarterly; and in the remaining months at a simple interest rate of 2% effective monthly. Also determine the total interest the account earns during those 2 years. MAKE A CASH FLOW CHART. II.Consider now that the account referred to in Problem I pays effective monthly compound interest at a constant rate from the opening of the account onwards. Then determine the numerical value of the rate that would produce the same effect on the account as that obtained from the way interest is paid in Problem I.arrow_forwardWhat lump sum of money must be deposited into a bank account at the present time so that $500 per month can be withdrawn for five years, with the first withdrawal scheduled for six years from today? The interest is 9% compounded quarterly. Show complete solution with cash flow diagram.arrow_forwardYou have borrowed $60,000 from a bank at an interest rate of 12% per year, compounded monthly. You are to repay the loan and its interest charges in equal monthly payments over a 20-year period. The estimated annual inflation rate is 5%, compounded monthly. a) What is the amount of your monthly payments? b) What is the bank's real rate of return on this deal?arrow_forward
- suppose that 4,500 pesos is deposited each year into a bank account that pays 8% interest compounded quarterly how much would be accommodated in his fund by the end of the fourth year. the first payment occurs at time zero. draw the complete diagram.arrow_forwardSolve this finance question early. A loan of $A is taken out today at j4 = 6%, repaid over n-years with quarterly payments of $2793.28. The total amount of principal repaid in the first 5 years (first 20 payments) is $26,436.83. What is A?arrow_forwardFind the equivalent present worth of the cash receipts in the accompanying diagram, where i = 8% compounded annually. In other words, how much do you have to deposit now (with the second deposit in the amount of $1,000 at the end of the first year) so that you will be able to withdraw $600 at the end of the second year through the fourth year , and $ 800 at the end of the fifth year , where the bank pays you 8% annual interest on your balance ?arrow_forward
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