Which of the given interest rates and compounding periods would provide the best investment? percent per year, compounded semiannually; (a) 8 (b) 8 percent per year, compounded quarterly; (c) 8 percent per year, compounded continuously. Your answer is (input a, b, or c)
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- Which of the given interest rates and compounding periods would provide the best investment?(a) 10 1/2 percent per year, compounded semiannually;(b) 10 1/4 percent per year, compounded quarterly;(c) 10 percent per year, compounded continuously.Suppose that an investment promises to pay a nominal 9.6 percent annual rate ofinterest. What is the effective annual interest rate on this investment assuming thatinterest is compounded (a) annually? (b) semiannually? (c) quarterly? (d) monthly? (e)daily (365 days)? (f) Weekly?ou can assume that all payments are made at the beginning of the period and use "1" for the "type" argument in the formula. A. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded annually? B B. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded quarterly? 4 5 6 27 28 29 C. Suppose you invest St $ 570 monthly. What is the future value of the investment in 29 years, if interest at 5% is compounded monthly? Question 1 Question 2 + Ready Accessibility: Investigate MAR 17 A W +
- Example 1. Compound interest When interest is compounded continuously, the rate of change of the amount x of the investment is proportional to the amount present. In this case, the proportionality constant is the annual interest rate r (as a decimal); that is, dx/dt = rx. (a) If $2000 is invested at 8%, compounded continuously, find an equation for the future value of the investment as a function of time t, in years. (b) How long will it take for the investment to double? (c) What will be the future value of this investment after 35 years?You are comparing two investments. The first pays 3 percent interest per month, compounded monthly, and the second pays 6 percent interest per six months, compounded every six months. a. What is the effective semiannual interest rate for each investment? b. What is the effective annual interest rate for each investment? c. Based on the interest rates, which investment is preferred? Does the decision depend on whether the comparison is based on an effective six-month rate or an effective one-year rate? a. The effective semiannual interest rate for the first investment is percent. (Type an integer or decimal rounded to two decimal places as needed.)Suppose that an investment promises to pay a nominal 9.6 percent annual rate of interest. What is the effective annual interest rate on this investment assuming that interest is compounded (a) annually? (b) semiannually? (c) quarterly? (d) monthly? (e) daily (365 days)? (f ) continuously? (Note: Report your answers accurate to four decimal places –e.g., 0.0987 or 9.87%.)
- The following investment requires a table factor for a period beyond the table. Calculate the new table factor and the present value (principal). Use Table 11-2. Round your new table factor to five decimal places and your present value to the nearest cent. Compound Amount New Table Factor Term of Nominal Interest Present Investment (years) Rate (%) Compounded Value $36,000 36 7 annually $ Need Help? Read ItCan someone explain how I solve it in an easy way? 14.) For the investment situation below, identify the annual interest rate, the length of the investment in years, the periodic interest rate, and the number of periods of the investment. 8% compounded quarterly for 5 years (a) the annual interest rate (b) the length of the investment in years (c) the periodic interest rate (d) the number of periods of the investmentAn investment becomes P 4,500,000 four years from now and becomes P 5,250,000 thirteen years from now. a. Assuming rate of compounded interest remains constant through time, what was the investment's value on the present time? b. What rate of interest compounded quarterly is equivalent to the interest rate of the given investment? c. What rate of interest compounded monthly is equivalent to the interest rate of the given investment?
- The following investment requires a table factor for a period beyond the table. Calculate the new table factor and the present value (principal). Use Table 11-2. Round your new table factor to five decimal places and your present value to the nearest cent. CompoundAmount Term ofInvestment (years) NominalRate (%) InterestCompounded New TableFactor PresentValue $37,000 38 7 annually $Investment Analysis The effective rate of interest can be calculated using the formula reff = 1 + r m m − 1 where reff is the effective rate of interest, r is the nominal interest rate per year, and m is the number of conversion periods per year. Find the nominal interest rate that, when compounded monthly, yields an effective interest rate of 3%/year. (Round your answer to two decimal places.)19. Find the Macaulay and Modified durations of an investment that pays $2,000 at the end of year 2 and $3,000 at the end of year 5. Assume a level annual effective interest rate of i = 3%. Be sure to use the correct units for each answer.
