Suppose that a company borrows $100,000 from investment pool at 14% compounded quarterly over 3 years. If the average quarterly general inflation rate is expected to be 0.35%, determine the equivalent equal quarterly payment series in constant dollars.

Q: then the present value factor of the lumpsum is:

A: Time value of money (TVM) is used to measure the value of money at different point of time in the…

Q: You make a series of quarterly deposits every quarter starting at the end Quarter 1 and ending at…

A: Future value refers to the value of the current asset at some future date affected by the inflation…

Q: money is worth 7.3%, compounded quarterly?

A: Present Value of future cash flow means the cash flows discounted at a given rate of return. FV*…

Q: A firm is scheduled to receive payment of $32,000 in 1 year. What is the present value of this…

A: To calculate the present value of payment that will receive after 1 year we will use the below…

Q: A firm is scheduled to receive payment of $32,000 in 2 years. What is the present value of this…

A: To calculate the present value we will use the below formula   Present value = FV/[1+(r/m)]n*m Where…

Q: Suppose you pay $9,400 for a $10,000 par Treasury bill maturing in 6 months. What is the effective…

A: The time value of money means the present available money is worth more than the future money.…

Q: How much is the sum of the present value of the expected return over those periods

A: Cash Flows (Year 1-10) (CF) =  $15,000 per year Annual interest rate (r) = 5% Time Period (t) = 10…

Q: What per annum nominal interest rate with interest compounded quarterly would be needed to achieve…

A: Compounding refers to the power of doubling the investment by adding interest .Compounding helps in…

Q: An account has nominal rate of 5.7%. Find the effective annual yield, rounded to the nearest…

A:

Q: 3. Suppose that an investment promises to pay a real 9% annual rate of interest and inflation rate…

A: given Real Rate of Interest 9% Inflation 3%

Q: An account has a nominal rate of 6.6%. Find the effective annual yield, rounded to the nearest…

A: Effective annual yield (EAY) takes into consideration the impact of compounding frequency. In…

Q: A credit card company has interest rate of 10% per annum. If interest is compounded quarterly,…

A: Solution:- Effective Annual Rate (EAR) means the net annual rate for the year after effect of all…

Q: Suppose a savings and loan pays a nominal rate of 2.3% on savings deposits. Find the effective…

A: Here,Nominal Interest Rate is 2.3%Compounding Period (m) is Quarterly i.e 4

Q: Consider a situation, where (a) the equal-payment cash flow of $1,500 in constant dollars over three…

A: Constant dollar equal payment cash flow $1500 for three years The inflation rate of 4% An interest…

Q: An investment of $14,000 is growing at 5% compounded semi-annually. a. Calculate the maturity value…

A: Maturity value: A financial obligation's maturity value is the sum owed and due to be paid to the…

Q: Suppose that for the coming year, the inflation is forecast at an effective annual rate of 1.27%. If…

A: The issue is with finance, more especially with the computation of real interest rates or interest…

Q: What is the present value of 24 monthly cashflows of $420 each starting today if the interest rate…

A: Using excel PV function, This is question of annuity due since cashflow starting today

Q: A series of twenty-one constant-dollar payments beginning with $5,000 at the end of the first year…

A: If inflation is deducted from the nominal interest rate then real interest rate is derived. This…

Q: Suppose that $1,000 is deposited each year for five years into an equity (common stock) account…

A: To find the real future value of fund, we need to remove the inflation effect from the rate of…

Q: Consider an EOY geometric gradient, which lasts for eight years, whose initial value at EDY one is…

A: Here, Initial Value of cash flow of first case is $5188 Geometric gradient interest rate is 6% Cash…

Q: f the stated interest rate is 10%, number of years is 8 , and market interest rate is 12% compounded…

A: Formula: Present value Annuity factor = [ 1 - 1 / ( 1 + i )N ] / i

Q: An account pays interest at a nominal rate of 3% per year. (a) Find the effective annual yield if…

A: Effective yield refers to return on bond that has its interest payments and is calculated by…

Q: You deposit $10,000 in an account that pays 4.5% interest compounded quarterly. Use the future value…

A: Interest rate (r) = 4.5% compounded quarterly Hence, compounding frequency (k) = 4

Q: A series of five payments in constant dollars, beginning with $6,000 at the end ofthe first year,…

A: The current value of the cash flows or an asset after discounting is termed as the present worth.

Q: An investment is expected to make future returns at a rate of £1,800 per annum over the next 10-…

A: Here, Particulars Values Future returns  £ 1,800.00 Time period 10.00 Nominal interest rate…

Q: Suppose that you can pay 15,000,000 VND per month for the next 30 years. What is the largest loan…

A: The present value is the value of the sum received at time 0. It is the current value of the sum…

Q: Suppose you pay $9,700 for a $10,000 par Treasury bill maturing in three months. What is the holding…

A: Holding period return is the return % that an investment generates over the period of time the asset…

Q: An investment of $15,000 was growing at 3.5% compounded quarterly. a. Calculate the maturity value…

A: Maturity value of the investment includes the investment amount & interest earned on the…

Q: If a bank was offering a nominal rate of return of 12% compounded monthly, what is the annual…

A: Formula: Annual effective rate = ( 1 + r / N )N - 1 R = rate of return N = Period

Q: An account that compounds interest daily has an annual percentage yield of 5.9%.  What is the annual…

A: The objective of the question is to find the annual interest rate for an account that compounds…

Q: An account has nominal rate of 6.5%. Find the effective annual yield,rounded to the nearest…

A: Nominal rate = 6.5% To Find: Effective interest rate (compounding  quarterly, monthly, and daily)

Q: With a present value of $125,000, what is the size of the withdrawals that can be made at the end of…

A: Working note:

Q: 7. Determine the exact simple interest and future worth of P1,500,000 invested for the period from…

A: Future Value The future value is the amount that will be received at the end of a certain period.…

Q: A series of four annual constant-dollar payments beginning with $50,000 at the end of the first year…

A: Constant dollar analysis: The payment of $50,000 from the end of the first year growing at 8% for…

Q: An account pays interest at a nominal rate of 10% per year. Find the effective annual yield if…

A: In the above question we require to compute the effective annual yield from below details : Nominal…

Q: Find the annual percentage yield (APY) in the following situation. A bank offers an APR of 1.45%…

A: ANNUAL PERCENTAGE YIELD APY indicates the total amount of interest you earn on a deposit account…

Q: A bank quoted 10% annual interest rate. If the bank compounds the interest rate quarterly, what…

A: Quarterly rate = Annual rate / Number of quarters in a year Quarterly rate =10% /4 Quarterly rate…

Q: Find the annual percentage yield (APY) in the following situation. A bank offers an APR of 4.05%…

A: The APR does not take into consideration the impact of the compounding frequency. It is simply the…

Q: You got a 22,000 Rupees loan from bank Alflah for the 6 years that is charges 12% interest prepare…

A: The loan repayment of Rs. 22000  in 6 years of installment of Rs. 5351 at the interest rate of 12%.…

Q: A series of equal quarterly deposits of $1000 extends over a period of five years. It is desired to…

A: Future worth is the accumulated amount of regular payments at a defined interval. This means we make…

Q: Consider a loan of Sh. 50,000 with a 30 year term, interest of 6% (i+p) payable monthly. The loan…

A: A loan is a type of financial agreement whereby a lender gives a borrower a certain amount of money,…

Q: that, for a three year period, the yearly inflation rate is 10% in the firstyear, 12% in the second…

A: In this  we need to calculate the average inflation per year and from that we can calculate average…

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.