Giant electronics is issuing 20-year bonds that will pay coupons semiannually. the coupon rate on this bond is 7.8 percent. if t
1 answer:
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Answer:
Q1. Selena will have earned <em><u>$ 25.00</u></em> in interest by the end of the year.
Since interest paid is 5% in simple interest, we can calculate that by using the formula:
Q2. The balance in Suki's account at the end of two years will be <em><u>$866.2854.</u></em>
This means that she will have earned <em><u>$66.2854</u></em> in interest.
Since interest is compounded quarterly, Suki will receive interest for 8 periods. The formula for compound interest with more than one interest period per year is:
where
A is the amount at the end of the period
P is the principal
i is interest rate per annum
m is number of compounding periods in a year
n is number of years
Substituting the values in the formula above we get,
Now, we calculate the interest earned by doing \mathbf{CI = A -P}.
Q3. It will take <em><u>18 years</u></em> for the money to double to $100.
Since we need to use the rule of 72, we'll divide 72 by the interest rate to determine the number of years needed to double the investment's value.
So, the number of years is .
Answer:
$ 3,085
Explanation:
Given that;
The present value(PV) ------ ???
Future payment (F) ---- $5,000
The annual effective rate are 4%, 5% and 5.5% respectively, which can be illustrated as;
r = 0.04, 0.05 and 0.055 respectively.
The present value formula is given as:
PV = 5000 × (1.04)⁻³(1.05)⁻²(1.055)⁻⁵
= $ 3,084.814759
≅ $ 3,085