question archive Find the present value of $500 to be paid at the end of 28 months (a) if the nominal interest rate is 6% convertible monthly, (b) if the nominal discount rate is 6% compounded every 4 months, (c) if the nominal interest rate is 4% compounded semiannually, (d) if the nominal discount rate is 5% payable annually, Apply the simple interest method for the remaining fraction of the conversion period if necessary
Find the present value of $500 to be paid at the end of 28 months (a) if the nominal interest rate is 6% convertible monthly, (b) if the nominal discount rate is 6% compounded every 4 months, (c) if the nominal interest rate is 4% compounded semiannually, (d) if the nominal discount rate is 5% payable annually, Apply the simple interest method for the remaining fraction of the conversion period if necessary
Subject:FinancePrice:3.87 Bought7
Find the present value of $500 to be paid at the end of 28 months
(a) if the nominal interest rate is 6% convertible monthly,
(b) if the nominal discount rate is 6% compounded every 4 months,
(c) if the nominal interest rate is 4% compounded semiannually,
(d) if the nominal discount rate is 5% payable annually,
Apply the simple interest method for the remaining fraction of the conversion period if necessary.
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Answer:
Find the present value of $500 to be paid at the end of 28 months
(a) if the nominal interest rate is 6% convertible monthly,
Present worth = 500 / (1+6%/12) 12(28/12) = $434.831
(b) if the nominal discount rate is 6% compounded every 4 months
Present worth = 500 / (1+6%/4) 4(28/12) = $435.131
(c) if the nominal interest rate is 4% compounded semiannually,
Present worth = 500 / (1+4%/2) 2(28/12) = $455.865
(d) if the nominal discount rate is 5% payable annually,
Present worth = 500 / (1+5%/1) 1(28/12) = $455.865
formula:
Present worth = Future worth / (1+r%/m) m(t)
