Question

Examine the formulas below for a $5000 investment. Determine the number of interest periods, the nominal rate and the effective rate.


a. A=5000(1+ (0.0345/4))^4t

Nominal rate:_____%
Effective rate:_____%

b. A=(1+(0.052/12))^12t
Nominal rate:______%
Effective rate:______%

c. A= (1+0.36)^t
Nominal rate:_____%
Effective rate:______%


d. A=e^0.0641t
Nominal rate:_____%
effective rate:_______%

Answer 1

d. A=e^0.0641t Nominal rate:_____% effective rate:_______%

Answer 2

yes thats the last problem...how can we solve it tho?

Answer 3

I don't know those terms. I'll have to look them up or maybe someone will come along who knows them.

Answer 4

hmmm the nomical and effective rate you mean?

Answer 5

Yes. The nominal rate is the rate without compounding.

Answer 6

hmmm im still a little lost...

Answer 7

So for the first one, I think that would be the 3.45%

Answer 8

so i have...

a.) N.R: 3.45%
E.R:

b.)N.R: 5.2
E.R:

c.) N.R:
E.R:

d.) N.R: 6.41
E.R:
im missing some

Answer 9

P = principal,
\[\huge P\left(1+\frac r {n}\right)^{nt}\]

Answer 10

so...

Answer 11

Well, nominal is r, that's certain...

Answer 12

In the formula

A = P(1+r/n)^(n*t)

the nominal interest rate is r

the effective interest rate (E) is found by this formula

E = (1 + r/n)^(n*t) - 1

Answer 13

Now the effective rate...
I have found that the effective rate is: