| n, Assignment 05 . Time Value Mindtp-Cengage Les X An Investor Can ivest Mon +
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| n, Assignment 05 . Time Value Mindtp-Cengage Les X An Investor Can ivest Mon + OA.https:/ 5165122196041210645897113618iss MINDTAP HW 04 Time Value of Money 11. Nonannual compounding period The number of compounding periods in one year is called compounding frequency. The compounding frequency AaAa affects both the present and future values of cash flows. An investor can invest money with a particular bank and earn a stated interest rate of 4.40%; however, interest will be compounded quarterly what are the nominal, periodic, and effetive interest rates for this Investment Interest Rates Nominal rate Periodic rate Effective annual rate 4.47% Rahul needs a loan and is speaking to several lending agencies about the interest rates they would charge and the terms they omer. He particularly likes his local bank because he is being offered a nominal rate of 4%. But the bank is compounding monthly. What is the effective interest rate that Rahul would pay for the loan? 4.388% o 4.074% 3.980% 4.251% Another bank is also offering favorable terms, so Rahul decides to take a loan of $23,000 from this bank. He signs the loan contract at 10%compounded daily for four months. Based on a 365-day year, what is the total amount that O Type here to searchExplanation / Answer
Nominal Rate 4.40% Its stated rate or APR Periodic rate 1.10% Its Nominal rate ÷ no of compounding periods in a year for quarter its 4 Effective annual rate 4.47% =EFFECT(4.4%,4) Rahul's effective rate would be 4.074% Ans B =EFFECT(4%,12) rahul owes $23,779.70 Ans D explanation: days 4 months x 365/12 N 121.7 days loan (PV) 23000 rate 10%/365 due amount $23,779.70 =FV(0.1/365,121.7,,-23000)
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