Question
The interest rate per payment period is the semi-annual rate. The formula for a per period interest rate given below enables you to determine the
The interest rate per payment period is the semi-annual rate.
The formula for a per period interest rate given below enables you to determine the Effective
Rate for any period given a quoted rate:
= (1 + ) 1
f: frequency of payments per year m: number of compounding intervals per year.
QR: quoted rate
Find the semi-annual interest rate (round off to 4 decimal points); draw a timeline to be sure where the CFs occur.
Answer parts a and b.
You should fine the following answers:
(a). $17,553.40
(b). $12,774.05
Answer the following question:
You came up with a new app patented for 17 years. Profits will be $2 million at the end of the first year then grow at 5% p.a. for 17 years. What is the present value of your app if the interest rate is 10%?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started