Question
$50,000 is invested in such a way as to repay the investor an interest payment of $1,000 at the end of each quarter for 10
$50,000 is invested in such a way as to repay the investor an interest payment of $1,000 at the end of each quarter for 10 years. At the end of the 10 years, the $50,000 is returned in a lump sum.As soon as he interest payment is received, it is deposited in a savings account bearing interest at 6% nominal annual rate compounded quarterly. It is desired to find the nominal rate of return, compounded semiannually, on the $50,000 investment over the 10 year period. Which of the following expresses the rate of return?
A. 2.085/10, B. 2.085/20, C. ((2.085)^(1/10))-1, D ((2.085)^(1/20))-1, E. 2((2.085)^(1/20))-1
Please, no excel spreadsheets.
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