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Problem 2 A bank offers a nominal annual interest rate of 8% for a new savings account (i) What is the effective rate when compounded
Problem 2 A bank offers a nominal annual interest rate of 8% for a new savings account (i) What is the effective rate when compounded quarterly? (ii) If you want to build $500, 000 in savings in 2 years, what quarterly annuity must be made? Problem 3 An investment builds up to $2, 500, 000 in 5 years. What is its present value at: (i) quarterly compounding discount rate of 7% (ii) annually compounding discount rate of 7% (iii) simple monthly discount rate of 1%
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