+598 Find the nominal rate of interest
(a) At which $1000 will grow to $1800 in four years compounded monthly;
(b) at which money will double in seven years if compounded quarterly
(c) if the effective annual rate of interest is 7.75%
(d) that is equvilant to 6% compounded quarterly
Need help with steps, any help would be great
(a) At which $1000 will grow to $1800 in four years compounded monthly;=14.79% comp. monthly
(b) at which money will double in seven years if compounded quarterly=10.03% comp. quarterly
(c) if the effective annual rate of interest is 7.75%
(d) that is equvilant to 6% compounded quarterly
Don't know what you want in part c and d. Explain it clearly.
+598 Find the nominal rate of interest (c) if the effective annual rate of interest is 7.75%
Find the nominal rate of interest (d) that is equvilant to 6% compounded quarterly
You must understand what the word "nominal" means. It means "in name only". But you have to specify the compounding period. Example: 8% is effective annual rate. What is the nominal rate compounded, daily, monthly, quarterly, semi-annually.........etc.
+598 My apologies.
It litereally says :
Find the nominal annual rate of interest. Then lists
(c) if the effective annual rate of interest is 7.75% and compounding is done monthly
(d) that is equvilant to 6% compounded quarterly
Not too sure if we are making any progress but thats literally what it says lol.
Sorry for confusion
My apologies.
It litereally says :
Find the nominal annual rate of interest. Then lists
(c) if the effective annual rate of interest is 7.75% and compounding is done monthly
(d) that is equvilant to 6% compounded quarterly
Not too sure if we are making any progress but thats literally what it says lol.
Sorry for confusion
OK. That is much clearer. In (c) the effective annual rate is 7.75%=7.49% nominal rate compounded MONTHLY.
(d) Is still NOT clear what they want. However, 6% comp. quarterly=6.14% effective annual rate=5.97% comp. monthly=5.96% comp. daily=6.05% comp. semi-annually........etc.
