1- Assuming simple interest how much will you have in an account if you deposit
ID: 2621739 • Letter: 1
Question
1- Assuming simple interest how much will you have in an account if you deposit $10,000 for 6 months (182 days) at 7.75%?
2- You make four quarterly payments of $425.60 on a $1400 loan. What annual interest rate are you paying?
3- What is the effective rate of interest on an APR of 6% compounded monthly?
4- What is the future value of $6000 at a nominal rate of 6.75% compounder quarterly for 5 years? What is the future value if it is compounded continuously?
5- Convert a rate of 5.25 % compounded semiannually to an a) equivalent continuous rate and to b) an equivalent quarterly rate.
6- What is the HPR of a 100 shares of stock you purchased for $5/share and sold for $8/share and paid you a dividend of $1/
7- If you held the above stock for 3 months what is the annualized HPR?
8- You invest $6,000 that becomes $15,000 in 8 years. What is the effective annual percentage rate?
9 - Below is the end of year stock price sequence in chronological order for Microsoft Corp. What is there stock price Growth Rate using the GM? Check your answer by doing it in three methods.
Year
Stock price
2005
$14.00
2006
$15.50
2007
$15.75
2008
$13.80
2009
$14.00
2010
$17.00
2011
$12.00
2012
$16.00
2013
$16.70
2014
$15.25
Year
Stock price
2005
$14.00
2006
$15.50
2007
$15.75
2008
$13.80
2009
$14.00
2010
$17.00
2011
$12.00
2012
$16.00
2013
$16.70
2014
$15.25
Explanation / Answer
1. A = PNR/100 +P
= 10000*0.5*7.75/100 + 10000
= 10387.5
2. Amount paid = 425.6*4 = 1702.4
Interest paid = 1702.4-1400 = 302.4
302.4 = PNR/100 = 1400*1*R/100
R = 21.6%
3. Image (effective APR)
6.16%
4. A = P(1+i/4)^4n
A = 6000(1+6.75/400)^20
= 8385
For continuous compounding, r = exp(i) -1
R = 6.98
A = 6000(1+.0698)^5
= 8408.64
5 2ln(1+5.25/2) = 2.58
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