Effective annual rate, math homework help
Effective annual rate, math homework help
1. assume that the initial deposit is $45000 and the nominal annual interest rate is 3.7%. Determine the amount in the account in 20 years if the interest is compounded as follows:
(a) Annually:
(b) Monthly:
(c) Weekly (assume all years have 52 weeks):
(d) Daily (assume all years have 365 days):
2.but use an annual interest rate of 6.5 %.
(a) (i) Find the effective annual rate for that annual interest rate compounded 1,000 times/year:%
(a) (ii) Find the effective annual rate for that annual interest rate compounded 10,000 times/year:%
(a) (iii) Find the effective annual rate for that annual interest rate compounded 100,000 times/year:%
(b) Look at the sequence of answers in part (a) and notice they are getting closer to the continuously compounded rate for a 6.5 % annual interest rate. Compute that continuously compounded rate using the number e: %
3.pretend the US inflation rate had been 3.7 % per year and the Argentinian inflation rate had been 36 % per month.
(a) What is the yearly equivalent of Argentina’s 36 % monthly inflation rate?%
(b) What is the monthly equivalent of the US 3.7 % yearly inflation rate? %