Question

In: Finance

Calculate the equivalent periodic interest rate per payment interval for the following annuity Semi-annual payments earning 6% compounded monthly

O 5.00000%

O 3.03775%

O 3.08771%

0 2.97233%

O 0.83161%

Expert Solution

APR =6%

Compounding Monthly

Payment Period = 6 month

Hence, six monthly interest rate would be

Effective interest rate = (1+r/n)m

n= number of times compounding in a year

r = annual rate

m = period for which effective interest rate to be calculated

Effective interest rate = (1+0.06/12)6 -1

=1.0303775 -1

= 3.03775%

Equivalent periodic interest rate is 3.30775%.

Umair answered 1 year ago

What is the annual compounded monthly rate equivalent to 19% per annum compounded per quarter?

For 50000, Smith purchases a 36-payment annuity-immediate with monthly payments. Assume an effective annual interest rate...

For 50000, Smith purchases a 36-payment annuity-immediate with monthly payments. Assume an effective annual interest rate of 12.68%. For each of the following cases find the unknown amount X. (a) The first payment is X and each subsequent payment is 50 more than the previous one. (b) The first payment is X and each subsequent payment until the 18th pay- ment (and including the 18th payment) is 0.2% larger than the previous one. After the 18th payment, each subsequent payment...

A.) If you make quarterly payments of$331.00 into an ordinary annuity earning an annual interest rate...

A.) If you make quarterly payments of$331.00 into an ordinary annuity earning an annual interest rate of 5.47%, how much will be in the account after 4 years? B.) If you make monthly payments of $464.00 into an ordinary annuity earning an annual interest rate of 7.4% compounded monthly, how much will you have in the account after 5 years? After 9 years? C.) In 3 years Harry and Sally would like to have $26,000.00 for a down payment on...

The effective semi-annual interest rate is 5%. The equivalent effective monthly rate is ___________ (Carry out...

The effective semi-annual interest rate is 5%. The equivalent effective monthly rate is ___________ (Carry out 4 places after the decimal point, and write the answer as a decimal)

In the following ordinary annuity, the interest is compounded with each payment, and the payment is...

In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period. Find the required payment for the sinking fund. (Round your answer to the nearest cent.) Yearly deposits earning 12.9% to accumulate $2500 after 12 years. The Oseola McCarty Scholarship Fund at the University of Southern Mississippi was established by a $150,000 gift from an 87-year-old woman who had dropped out of sixth grade and worked for...

Consider a level annuity-due with annual payments, and an annual interest rate of 6%. The value...

Consider a level annuity-due with annual payments, and an annual interest rate of 6%. The value of the annuity-due, on the day of its first payment, is $5,231.50. Using the same interest rate, the value of this annuity on the day of its last payment, is $16,778.13. Find the number of payments and the amount of the level payment for this annuity.

Thirteen semi-annual deposits are made earning interest of 6.3% compounded semi-annually. The size of the first...

Thirteen semi-annual deposits are made earning interest of 6.3% compounded semi-annually. The size of the first deposit is $1600 and the deposits increase at 3.2% thereafter. a)Determine the total amount deposited b)how much was the accumulated value of the deposits just after the last deposits was made c)what is the size of the 11th deposits d)what is the amount of interest included in the accumulated value

1. In the following ordinary annuity, the interest is compounded with each payment, and the payment...

1. In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period. Find the required payment for the sinking fund. (Round your answer to the nearest cent.) Yearly deposits earning 12.8% to accumulate $3500 after 12 years. 2. In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period. Find the amount of time...

21. the following ordinary annuity, the interest is compounded with each payment, and the payment is...

21. the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period. Find the required payment for the sinking fund. (Round your answer to the nearest cent.) Monthly deposits earning 4% to accumulate $3000 after 10 years. 22. the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period. Find the required payment for the sinking...

(a) What interest rate compounded monthly is equivalent to (has the same APY as) 15% compounded...

(a) What interest rate compounded monthly is equivalent to (has the same APY as) 15% compounded semi-annually? (b) What interest rate compounded continuously is equivalent to (has the same APY as) 15% compounded semi-annually?