What is the nominal annual interest rate if the effective annual rate is 5.5% and compounding is continuous?

Q: The further in the future I receive any given pound amount, the higher its present value. Select…

A: Money has a time value. This means that the purchasing value of money decreases over time. Due to…

Q: If the annual interest rate is 9% and inflation rate is 5%. What does the tax rate have to be in…

A: Real rate of return=1+annual interest rate1+Inflation rate-1=1.091.05-1=3.8%

Q: What is the forward rate? What is the relationship between forward rates and the spot rates? Provide…

A: In the context of derivatives, a forward rate is the interest rate implied for a future period of…

Q: If there is a deflation rate of 2% and your account is earning a nominal interest rate of 1.75%,…

A: Deflation rate (d) = 2% Nominal interest rate (r) = 1.75%

Q: What real interest rate is offered by a savings account with a 13% nominal rate during a period of…

A: Nominal Interest Rate = 13% = 0.13Inflation Rate = 6% = 0.06

Q: For each of the following cases, indicate (a) to what interest rate columns and (b) what number of…

A: The time value of money is a key financial concept that indicates that a dollar amount in possession…

Q: The effective rate of interestis 3.25% per annum. Calculateto 6 sf. (a)The equivalent rate of…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub- parts…

Q: f the interest is compounded monthly then m is equal to?

A: Compound Interest Compound Interest refers to the interest generated on principal as well as on the…

Q: The nominal interest rate on a loan is 12.5% and inflation is 3%. What is the real interest rate?

A: Information Provided: Nominal Rate = 12.5% Inflation = 3%

Q: How long will it take for a CD to double, if money earns a simple interest rate of 4.8%? Round up…

A: Interest means the extra amount which we received because of investment made and will be paid in…

Q: 8. Find the nominal rate under which $3500 is the present value of $5000, due at the end of 123…

A: Note: I am suppose to provide the solution of one question at a time. Please repost the remaining…

Q: If you borrow $100 at 5% interest rate (nominal) and inflation rate is 3%, what is the most accurate…

A: nominal interest rate = nr = 5% Inflation rate = ir = 3%

Q: 1. Using the example of a savings account, explain the difference between the effective annual rate…

A: Saving account is the type of deposit account in which interest is paid on the amount deposited.…

Q: earns an annual interest rate of 12 percent compounded Semi annually. What is the effective annual…

A: The given problem can be solved using EFFECT function in excel. EFFECT function computes effective…

Q: With an interest rate of 10 % how long does it take for an invest- ment to triple, if the interest…

A: A concept that implies the future worth of the money is lower than its current value due to several…

Q: An investment pays simple interest, and triples in 14 years. What is the interest rate?

A: The sum of money that is charged or gained for the usage of money is known as interest, and it is…

Q: What is the annual effective interest rate equivalent to a nominal rate of 12 percent a year? Yanıt:

A: The effective rate of interest is an important technique in the case of multi-period compounding. If…

Q: If inflation is anticipated to be 6 percent during the next year, while the real rate of interest…

A: The nominal return is the sum of the inflation rate and the real rate that we can calculate using…

Q: Suppose that a savings account pays an effective rate of interest of 11.7 percent. What is the…

A: Equivalent Annual Compound Interest rate is the Actual rate of return calculated after compounding…

Q: a) What is the duration of a perpetuity with a yield of 8%?

A: Yield (r) = 8% Perpetuity duration is found using following formula:

Q: Suppose you have a k5000 bank deposits. The interest rate is 6% compounded quarterly for 1 year.…

A: The effective annual interest rate (EAR) represents the actual interest rate earned on an investment…

Q: What is the corresponding effective interest rate of 18% compounded semi-annually?

A: The effective interest rate is the real return earned on an interest-paying investment or savings…

Q: What is the interest rate “r” if PV=$100 and the FV=$350 in year t=12?

A: Present Value is the current value of a cash flow that can be occurred in future. Future value is…

Q: Suppose that you want to take out a loan and that your local bank wants to charge you an annual real…

A: Compute the nominal interest rate: Nominal interest rate is calculated by using following formula:

Q: Find the nominal interest rate compounded quarterly which could be used instea compounded monthly.…

A: In this we have to find effective interest rate in both cases and find equivalent rate.

Q: An investment pays simple interest and doubles in 11 years. What is the interest rate? Answer =…

A: Simple interest is the amount earned on initial investment it doesn't take compounding into…

Q: A bank promises to pay an interest rate of 13.9 percent compounded quarterly. What is the effective…

A: Using excel effective rate formula

Q: What nominal rate compounded quarterly can be charged to a payment at a nominal interest rate of 12%…

A: Effective Annual Rate The effective annual rate of interest is the actual or the real rate of…

Q: Which of the given interest rates and compounding periods would provide the best investment? (a) 10…

A: Given: Interest rate 10 1/2 percent per year, Interest rate 10 1/4 percent per year, Interest rate…

Q: An annual percentage rate (APR) is determined by annualizing the rate using compound interest.…

A: As the question contains multiple question , I will be solving only 1st 3 questions. For remaining…

Q: If the interest rate is 9%, what is the two-year discount rate?

A: In DCF, the Discount rate refers to the discounting factor representing the time value of money.

Q: If you are offered a nominal interest rate of 5% per annum, compounded monthly, what is the…

A: In this question we require to compute the effective annual interest rate from following details:…

Q: Megan Brink is offered the possibility of investing $8,205 today at 9% interest per year in a desire…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

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

A: Answer Real interest rate = 9% Inflation = 3% Quarterly compounding

Q: How long will an amount of money double at a simple interest rate of 2% per annum?

A: Let, it takes n years to double the money. Then, 2 = 1 + 1 x n x 2% 1 = n x 2% n = 1/2% n = 50 years

Q: Express the term Effective interest rate per payment period, quarterly payments with weekly…

A: The term Effective interest rate per payment period  is the interest rate that is computed for…

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.