5. Which of the following relationship is wrong? a. (A|p i%,n) = (A|F i%,n) + i

Question

5. Which of the following relationship is wrong? a. (A|p i%,n) = (A|F i%,n) + i b. (P|A i%,n + 1)- (P|A i%,n) = (P|F i%,n + 1) c. (P|F i%,n - 1) = (P|F i%,n)(1 + i) d. (F|P i%,n + 1) = (F|P i%,n)i 6. The effective annual interest rate will be greater than the APR a. only when it is calculated using the additive approach b. only when it is calculated using the subtractive approach c. when it is calculated using either the additive approach or the subtractive approach d. neither when it is calculated using the additive approach nor when it is calculated using the subtractive approach 7. With an annual interest rate 12% compounding monthly, by depositing $1,000 at the starting of each month for a year, how much can we collect in total at the end of year? a. $11,367.63 b. $12,682.50 c. $12,809.33 d. None of above

Explanation / Answer

5) a

6) d

7) FV = 1000[ (1+0.12/12)12 X 1 - 1] /( 0.12 / 12 ) X( 1+0.12/12)

FV = 12,809.33

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