Question 1

Answer the following:

a) Find the nominal annual rate of interest for the following investment.

Principal	Future Value	Time Due	Frequency of Conversion
$1004.00	$2166.36	7 years	monthly

The nominal annual rate of interest is ___compounded monthly .

(Round the final answer to four decimal places as needed. Round all intermediate values to six decimal places as needed.)

b) What is the effective annual rate of interest if $1200 grows to $1600 in 2 years compounded monthly ?

The effective annual rate of interest as a percent is ___%.

(Round the final answer to four decimal places as needed. Round all intermediate values to six decimal places as needed.)

c) What is the nominal rate of interest compounded quarterly if the effective rate of interest on an investment is 7.9%?

The nominal rate of interest is ___compounded quarterly

(Round the final answer to four decimal places as needed. Round all intermediate values to six decimal places as needed.)

d) A bank pays 5.6% compounded semi-annually on certain types of deposits. If interest is compounded quarterly, what nominal rate of interest will maintain the same effective rate of interest?

The nominal rate of interest is ___%

(Round the final answer to four decimal places as needed. Round all intermediate values to six decimal places as needed.

e) Find the nominal annual rate of interest compounded monthly that is equivalent to 6.4% compounded quarterly.

The nominal annually compounded rate of interest is ___%

(Round the final answer to four decimal places as needed. Round all intermediate values to six decimal places as needed.)

f) How long will it take $977.00 to accumulate to $1110 at 9% p.a. compounded monthly? State your answer in years and months (from 0 to 11 months).

The investment will take ___year(s) and ___ month(s) to mature.