Future value . Introduction: Future value (FV): The future value refers the value of present amount at a future date.

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Answer 1

Question

Chapter 5, Problem 5.39P

Sub part (a)

Summary Introduction

To calculate: Future value.

Introduction:

Future value (FV): The future value refers the value of present amount at a future date.

Sub part (b)

Summary Introduction

To calculate: Effective annual interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Sub part (c)

Summary Introduction

To calculate: Comparison of effective interest rate with nominal interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

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DIRECTION: ENCIRCLE THE BEST ANSWER. 4.) This refers to the interest rate per conversion period A Compound interest C Rate of interest B Periodic rate D. Simple interest 5) Thuis nefers to the amount paid or eames for the use of money A Conversion period C. Principal B. Interest D Rate 6) 30 months is equivalent to A 25 years B 2.75 years C 3 years D 3.25 years 1) How much is the simple interest on this financial transaction. P = .000 00. - * 6°.. and / 2 years AP120.00 B P600.00 CP1.300 00 D P6.000.00 6) What is the total number of conversion periods when a certain amount is borrowed are 10°. coupomded mouthly for 5 years? A.12 B 50 C 24 D. 60 How unch was the interest if Sophia borrowed P45.000 90 and paid a total of PS5.500.00 ar the end of the tem A PI0.500 00 CP11.500.00 B P45,000.00 D. P100.500.00 10.) What is the interest rate per conversion period if 125.900 00 was tvested at 3.4. compounded oruually for 4 years and 6 months 0033 C 0.110 B 0.330 D. 0 160 11. Jolu borowed…

10. Compounding Annual Rates For each of the cases in the table below: › Calculate the future value at the end of the specified deposit period Frequency, Time Value, and Effective b) Determine the effective annual rate (EAR) for parts A, B, C, and D c) Compare the nominal rate, r, to the EAR. What relationship exists between compounding frequency and the nominal and effective rates? Part Initial deposit Nominal rate Compounding - r frequency 6% 10% 5% 5% A $5,000 B $75,000 C $2,000 D $2,000 2 4 12 Continuous Deposit period (years) 5 3 10 10 FV EAR $6,719.58 6.09 $80,693.33 10.38 $3,294.02 5.12 $3,297.44

Compounding frequency, time value, and effective annual rates For each of the cases in the following table, а. Calculate the future value at the end of the specified deposit period. b. EAR. Determine the effective annual rate, С. Compare the nominal annual rate, r, to the effective annual rate, EAR. What relationship exists between compounding frequency and the nominal and effective annual rates? Case Initial Nom annual rate Comp.frq. Deposit Period A $2,700 7% 25 B $50,000 12% 4 3 C $1,100 7% 1 11 D $20,000 17% 4 8

Answer 2

Question

Chapter 5, Problem 5.39P

Sub part (a)

Summary Introduction

To calculate: Future value.

Introduction:

Future value (FV): The future value refers the value of present amount at a future date.

Sub part (b)

Summary Introduction

To calculate: Effective annual interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Sub part (c)

Summary Introduction

To calculate: Comparison of effective interest rate with nominal interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Chapter 5, Problem 5.39P

Sub part (a)

Summary Introduction

To calculate: Future value.

Introduction:

Future value (FV): The future value refers the value of present amount at a future date.

Sub part (b)

Summary Introduction

To calculate: Effective annual interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Sub part (c)

Summary Introduction

To calculate: Comparison of effective interest rate with nominal interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 5, Problem 5.39P

Sub part (a)

Summary Introduction

To calculate: Future value.

Introduction:

Future value (FV): The future value refers the value of present amount at a future date.

Sub part (b)

Summary Introduction

To calculate: Effective annual interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Sub part (c)

Summary Introduction

To calculate: Comparison of effective interest rate with nominal interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Expert Solution & Answer

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Answer 5

Chapter 5, Problem 5.39P

Sub part (a)

Summary Introduction

To calculate: Future value.

Introduction:

Future value (FV): The future value refers the value of present amount at a future date.

Sub part (b)

Summary Introduction

To calculate: Effective annual interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Sub part (c)

Summary Introduction

To calculate: Comparison of effective interest rate with nominal interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Answer 6

Chapter 5, Problem 5.39P

Sub part (a)

Summary Introduction

To calculate: Future value.

Introduction:

Future value (FV): The future value refers the value of present amount at a future date.

Answer 7

Chapter 5, Problem 5.39P

Sub part (a)

Summary Introduction

To calculate: Future value.

Introduction:

Future value (FV): The future value refers the value of present amount at a future date.

Answer 8

Sub part (b)

Summary Introduction

To calculate: Effective annual interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Answer 9

Sub part (b)

Summary Introduction

To calculate: Effective annual interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Answer 10

Sub part (c)

Summary Introduction

To calculate: Comparison of effective interest rate with nominal interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Answer 11

Sub part (c)

Summary Introduction

To calculate: Comparison of effective interest rate with nominal interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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Future value . Introduction: Future value (FV): The future value refers the value of present amount at a future date.

Solution Summary: The author explains that the future value refers to the value of present amount at a future date.

To calculate: Future value.

Introduction:

Future value (FV): The future value refers the value of present amount at a future date.

To calculate: Effective annual interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

To calculate: Comparison of effective interest rate with nominal interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

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Chapter 5 Solutions

Future value . Introduction: Future value (FV): The future value refers the value of present amount at a future date.

Solution Summary: The author explains that the future value refers to the value of present amount at a future date.

To calculate: Future value. Introduction: Future value (FV): The future value refers the value of present amount at a future date.

To calculate: Effective annual interest rate. Introduction: Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

To calculate: Comparison of effective interest rate with nominal interest rate. Introduction: Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

Want to see the full answer?

Chapter 5 Solutions

To calculate: Future value.

Introduction:

Future value (FV): The future value refers the value of present amount at a future date.

To calculate: Effective annual interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.

To calculate: Comparison of effective interest rate with nominal interest rate.

Introduction:

Effective interest rate (EAR): The effective, or true, annual rate is the annual rate of interest actually paid or earned.