Question 1 Republic Finance offers money at 1.24% per month compounded monthly.

Question

Question 1

Republic Finance offers money at 1.24% per month compounded monthly. What is the nominal interest rate? Express your answer as a percentage between 0 and 100.

Question 2

The interest rate is 9% compounded annually. Consider the following cash flow.
Year 0: (-$45)
Year 1: $0
Year 2: $87
Year 3: $142
Year 4: $192
Year 5: $252
Find the value of A --where you receive A 6 times (years 0-5)--that is economically equivalent to the preceding cash flow. HINT: This is different than the normal equal payment series because you are also receiving A in year 0.

Explanation / Answer

At Chegg we try to help student and solve your queries however we are authorized to answer 1 question and its sub-parts at time. Hence solving question no 1.

Solution 1.

Nomimal interest rate (annual) = Monthly interest rate × 12 = 1.24% × 12 =14.88%

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