Question

In: Accounting

Amy invests 1000 at an effective annual rate of 14% for 10 years. Interestis payable annually...

Amy invests 1000 at an effective annual rate of 14% for 10 years. Interestis payable annually and is reinvested at an annual effective rate ofi.At theend of 10 years the accumulated interest is 2341.08.Bob invests 150 at the end of each year for 20 years at an annual effective rateof 15%. Interest is payable annually and is reinvested at an annual effectiverate ofi.Find Bob’s accumulated interest at the end of 20 years.

Solutions

Expert Solution

Bob’s accumulated interest at the end of 20 years    9,041.49

Calculate the Reinvested rate

Result View

Formula View

Final Answer

Result View

Formula View


Related Solutions

Susan invests 500 at the end of each year for 7 years at an effective annual...
Susan invests 500 at the end of each year for 7 years at an effective annual interest rate of 5%. The interest credited at the end of each year is reinvested at an effective annual interest rate of 6%. The accumulated value (in both funds) at the end of 7 years is X. Mary invests 100 now at an effective annual interest rate of 6%. The interest credited at the end of each year is reinvested at an effective annual...
A Ford bond carries a coupon rate of 10%, payable semi-annually and has 15 years until...
A Ford bond carries a coupon rate of 10%, payable semi-annually and has 15 years until maturity. It has a yield to maturity (YTM /yield rate) of 8%. a. What price does the bond sell for? b. What will the price be if the bond yield rises to 10%? c. If Ford significantly reduced the amount of debt on its balance sheet, what would likely happen to the price of the bond? Explain. d. If Ford incurred a considerable amount...
There is a bond with FV = 1000, coupon rate of 10% paid annually and 5...
There is a bond with FV = 1000, coupon rate of 10% paid annually and 5 year maturity. At year 0, YTM = 8%. Given constant YTM, what is the bond price at time 1? What is capital gain yield and current yield? What are the prices of the bond in year 2, 3, 4, and 5? If at year 1, YTM becomes 12%, what is a bond price in year 1?
Convert a 10% continuously compounded annual rate (rcc annual)into an effective annual rate (reff annual)....
Convert a 10% continuously compounded annual rate (rcc annual) into an effective annual rate (reff annual). The equivalent effective annual rate is: (a) 230.258509% pa (b) 10.536052% pa (c) 10.517092% pa (d) 10.468982% pa (e) 9.531018% pa
A $60,000 bond with a coupon rate of 5.00%, payable semi-annually, is redeemable in 10.5 years....
A $60,000 bond with a coupon rate of 5.00%, payable semi-annually, is redeemable in 10.5 years. What was the purchase price of the bond, when the yield rate was 5.50% compounded semi-annually?
Bond 1 has a 10% annual coupon rate, $1000 maturity value, n = 5 years, YTM...
Bond 1 has a 10% annual coupon rate, $1000 maturity value, n = 5 years, YTM = 10% (pays a $100 annual coupon at the end of each year and $1,000 maturity payment at maturity at the end of year 5). Bond 2 is a zero coupon bond with a $1000 maturity value, and n = 5years; YTM= 10%. (has no coupon payments; only a $1,000 maturity payment paid at maturity at the end of year 5). What is the...
1.a The annual interest rate is 8% with annual compounding. Please calculate effective annual rate, effective...
1.a The annual interest rate is 8% with annual compounding. Please calculate effective annual rate, effective semi-annual rate, effective quarterly rate, effective monthly rate, effective weekly rate (1 year = 52 weeks), effective daily rate (1 year = 365 days). 1.b The annual interest rate is 8% with monthly compounding. Please calculate effective monthly rate, effective annual rate, effective semi-annual rate, effective quarterly rate.
Let's say a firm invests $45,000 today for 10 years at an interest rate of 5.6%....
Let's say a firm invests $45,000 today for 10 years at an interest rate of 5.6%. What will be the investment's future value 10 years from now assuming that the interest rate will compound annually? How will your answers change if the interest rate compounds semiannually?
What is the effective rate of interest per semi-annual period equivalent to 8% p.a. compounding annually?
What is the effective rate of interest per semi-annual period equivalent to 8% p.a. compounding annually?
Which one of the following has the highest effective annual rate? 6 percent compounded annually 6...
Which one of the following has the highest effective annual rate? 6 percent compounded annually 6 percent compounded semiannually 6 percent compounded quarterly 6 percent compounded daily
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT