Question

For each of the following cases, indicate in the chart below the appropriate discount rate (i) or Rate and the appropriate number of periods (n) or Nper to be used in present value calculations. (Round discount rates to 2 decimal places, e.g. 15.10%)

											(n) or Nper		(i) or Rate
		Annual Interest Rate			Number of Years			Frequency of Payment			Number of Periods		Discount Rate
1.		8%			2				Quarterly		enter a Number of Periods		enter percentages rounded to 2 decimal places %
2.		4%			6				Semi-annually		enter a Number of Periods		enter percentages rounded to 2 decimal places %
3.		5%			4				Annually		enter a Number of Periods		enter percentages rounded to 2 decimal places %
4.		12%			2				Quarterly		enter a Number of Periods		enter percentages rounded to 2 decimal places %
5.		10%			6				Semi-annually		enter a Number of Periods		enter percentages rounded to 2 decimal places %
6.		12%			11				Monthly		enter a Number of Periods		enter percentages rounded to 2 decimal places %

Answer 1

1. n will be:

= 2 years x Number of quarters in a year

= 2 x 4

= 8

r will be:

= 8% / 4

= 2%

2. n will be:

= 6 years x Number of semi annual period in a year

= 6 x 2

= 12

r will be:

= 4% / 2

= 2%

3. n will be:

= 4

r will be:

= 5%

4. n will be:

= 2 years x Number of quarters in a year

= 2 x 4

= 8

r will be:

= 12% / 4

= 3%

5. n will be:

= 6 years x Number of semi annual periods in a year

= 6 x 2

= 12

r will be:

= 10% / 2

= 5%

6. n will be:

= 11 years x Number of months in a year

= 11 x 12

= 132

r will be:

= 12% / 12

= 1%