Question
11.33463% , with interest added (compounded) daily. How much will you have in your account on October 1 , or 9 months later? (1) What
11.33463%
, with interest added (compounded) daily. How much will you have in your account on October 1 , or 9 months later?\ (1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest rate is
10%
, compounded semiannually?\ (2) What is the PV of the same stream?\ (3) Is the stream an annuity?\ (4) An important rule is that you should never show a nominal rate on a time line or use it in calculations unless what condition holds? (Hint: Think of annual compounding, when
I_(NOM)=EFF%=I_(PER)
.) What would be wrong with your answers to parts (1) and (2) if you used the nominal rate of
10%
rather than the periodic rate,
(I_(NOM))/(2)=10(%)/(2)=5%
?
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