What is the effective annual rate of interest if $1000.00 grows to $1400.00 in two years compounded quarterly?CThe effective annual rate of interest as a percent is %.(Round the final answer to four decimal places as needed. Round all intermediate values to six decimal places as needed.)An amount of $1100.00 earns $400.00 interest in five years, two months. What is the effective annual rate if interest compounds semi-annually?...

Introduction Effective annual rate of interest Effective annual interest rate refers to the form…

Answered: What is the effective annual rate of…

What is the effective annual rate of interest if $1000.00 grows to $1400.00 in two years compounded quarterly The effective annual rate of interest of a percent in %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 31P

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

What is the effective annual rate of interest if $1000.00 grows to $1400.00 in two years compounded quarterly?
C
The effective annual rate of interest as a percent is %.
(Round the final answer to four decimal places as needed. Round all intermediate values to six decimal places as needed.)
An amount of $1100.00 earns $400.00 interest in five years, two months. What is the effective annual rate if interest compounds semi-annually?
...

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