Question
Compounding frequency, time value, and effective annual rates for each of the cases----- Amount of intial deposit // Nominal annual rate// compounding frequency// deposit period
Compounding frequency, time value, and effective annual rates for each of the cases-----
Amount of intial deposit // Nominal annual rate// compounding frequency// deposit period
| A | $2,400 | 7% | 2 | 6 |
| B | $51,000 | 12% | 6 | 4 |
| C | $1,100 | 6% | 1 | 10 |
| D | $19,000 | 16% | 3 | 7 |
A. Calculate the future value at the ed of the specified deposit period.
B. determine the effective annual rate, EAR
C. Compare the nominal annual rate, i, to the effective annual rate, EAR. What relationship exists between compounding frequency and the nominal and effective annual rates?
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Applied Conic Finance
Authors: Dilip Madan, Wim Schoutens
1st Edition
1107151694, 978-1107151697
