Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 3, Problem 7P
To determine
Calculate the nominal interest rate.
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Bid 1: 9% per year, compounded quarterly
Bid 2: 3% per quarter, compounded quarterly
Bid 3: 8.8% per year, compounded monthly
(a) Determine the effective rate for each bid on the basis of semiannual periods.
(b) What are the effective annual rates? These are to be a part of the final bid selection.
(c) Which bid has the lowest effective annual rate?
A savvy investor paid $5,500 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8% per year, payable quarterly. Three years after he purchased the bond, market interest rates went down, so the bond increased in value. If the investor sold the bond for $11,500 three years after he bought it, what rate of return did the investor make per quarter and per year (nominal)?
The rate of return per quarter is%.
The rate of return per year is%.
Q1: A sum of $2000 borrowed at 16% compounded daily for 2 years,
state
(a) The nominal rate of interest (G);
(b) The number of compounding periods per year (m);
(c) The periodic rate of interest (i);
Chapter 3 Solutions
Basics Of Engineering Economy
Ch. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Convert an interest rate of 1.5% per month into a...Ch. 3 - Prob. 7PCh. 3 - Prob. 8PCh. 3 - Prob. 9PCh. 3 - Prob. 10P
Ch. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Prob. 23PCh. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - Prob. 29PCh. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39PCh. 3 - Prob. 40PCh. 3 - Prob. 41PCh. 3 - Prob. 42PCh. 3 - Erbitux is a colorectal cancer treatment drug that...Ch. 3 - Prob. 44PCh. 3 - Prob. 45PCh. 3 - Prob. 46PCh. 3 - Prob. 47PCh. 3 - Prob. 48PCh. 3 - Prob. 49PCh. 3 - Prob. 50PCh. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - Prob. 53PCh. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Prob. 56PCh. 3 - Prob. 57PCh. 3 - Prob. 58PCh. 3 - The initial cost of a pulverized coal cyclone...Ch. 3 - Prob. 60PCh. 3 - Prob. 61PCh. 3 - Prob. 62PCh. 3 - Prob. 63PCh. 3 - Prob. 64PCh. 3 - Prob. 65PCh. 3 - Prob. 66PCh. 3 - Prob. 67PCh. 3 - Prob. 68APQCh. 3 - Prob. 69APQCh. 3 - Prob. 70APQCh. 3 - Prob. 71APQCh. 3 - Prob. 72APQCh. 3 - Prob. 73APQCh. 3 - Prob. 74APQCh. 3 - Prob. 75APQCh. 3 - Prob. 76APQ
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Similar questions
- State the present worth of the following future payments:(a) $8,000 five years from now at 8% compounded annually.(b) $10,000 six years from now at 10% compounded annually.(c) $12,000 eight years from now at 7% compounded annually.(d) $18,000 ten years from now at 9% compounded annually.arrow_forwardThe only time you change the original cash flow diagram in problems involving uniform series cash flows is when the: (a) payment period is longer than the compounding period (b) payment period is equal to the compounding period (c) payment period is shorter than the compounding period (d) stated interest rate is a nominal interest ratearrow_forwardCalculate the effective rate corresponding to each of the following rates:(a) 9% compounded semi-annually(b) 9% compounded quarterly(c) 9% compounded bi-monthly(d) 9% compounded monthly(e) 9% compounded continuouslyarrow_forward
- A credit card issued by the GECU credit union has an APR of 16% and an APY of 16.64%. (a) What is the compounding period? (b) Use the EFFECT function to find the compounding period.arrow_forwardCalculate the effective annual interest rate for 18% correspondingto each of the following:(d) compounded monthly(e) compounded weekly(f) compounded daily(g) Compounded continuouslyarrow_forwardFind the effective bimonthly interest rate equivalent to: (a) nominal annual interest of 9%, compounded 6 times per year; (b) nominal annual discount of 6%, compounded quarterly; (c) 1/2 nominal annual interest of 8%, compounded continuously.arrow_forward
- Calculate the effective annual interest rate for 18% correspondingto each of the following:(a) compounded semi-annually(b) compounded quarterly(c) compounded bi-monthly(d) compounded monthly(e) compounded weekly(f) compounded daily(g) Compounded continuouslyarrow_forwardA loan company offers money at 1.5% per month compounded monthly. What is the effective annual interest rate? write in percentage formatarrow_forwardINDICATE A CASH FLOW DIAGRAM For an interest rate of 3% per quarter, determine the nominal interest rate per (a) semiannual period, (b) year, (c) 2 years.arrow_forward
- What will be the amount accumulated by each of the given present investments?(a) $6.000 in 12 years at 8% compounded semiannually.(b) $14,500 in 18 years at 6% compounded quarterly.(c) $12,500 in 7 years at 8% compounded monthly.arrow_forwardFind the correct numerical value for the following factors from the interest tables:a. (F/P,10%,20)b. (A/F,4%,8)c. (P/A,8%,20)d. (A/P,20%,28)e. (F/A,30%,15)arrow_forwarddon't use excel only formula used. For an interest rate of 8% per year compounded quarterly, determine the number of times interest would be compounded (a) per 2 years, (b) per half year, and (c) per quarter.arrow_forward
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