1. ## pitt again :)

whats is the effective rate of interest earned on an investment that earns a fixed nominal annual rate of 2.5% interest, compounded 9 times per year?

I appreciate your help, my whole class is going crazy haha..

2. Originally Posted by pitt
whats is the effective rate of interest earned on an investment that earns a fixed nominal annual rate of 2.5% interest, compounded 9 times per year?

I appreciate your help, my whole class is going crazy haha..
$(1+\frac{.025}{9})^9 = 1.025279586$
Effective Rate of Interest = 2.53%

3. wot did u do to get 2.53?? could you explain it to me plz??

4. Originally Posted by pitt
wot did u do to get 2.53?? could you explain it to me plz??
You have a nominal rate of interest $i^{(n)}$ converted over n periods within a year. You want the effective rate of interest i, so solve i from the following:

$(1 + i) = (1 + \frac{i^{(n)}}{n})^n$

5. What is the principal required to accrue £2,397 when your principal is invested for 5 years at a fixed nominal rate of 1.86% compounded monthly

6. Originally Posted by pitt
What is the principal required to accrue £2,397 when your principal is invested for 5 years at a fixed nominal rate of 1.86% compounded monthly

$2397=A(1+\frac{.0186}{12})^{60}$

You can solve for A, the principal amount.

7. question 9

You invest £1,207 at the start of each year for the next 10 years at a fixed nominal rate of 4% interest, compounded annually. How much will you have in 10 years?

You invest £242 at the end of each month for the next 5 years at a fixed nominal rate of 2.7% interest, compounded monthly. How much will you have in 5 years?

ive got more those 2 questions.. is that ok?? thanks

8. Originally Posted by pitt
question 9

You invest £1,207 at the start of each year for the next 10 years at a fixed nominal rate of 4% interest, compounded annually. How much will you have in 10 years?

You invest £242 at the end of each month for the next 5 years at a fixed nominal rate of 2.7% interest, compounded monthly. How much will you have in 5 years?

ive got more those 2 questions.. is that ok?? thanks

These are annuities paying at the beginning of the year each year for N years. You are looking at the value in the future, and not the present value. I'll set up the first one for you.

$\sum_{i=1}^{10} (1207)(1.04)^i$

9. whats the final answer?? ive got 5 minutes to go, just give me any number plz, i dont understand this lol

10. the test is finished, thanks for your help hehe.. ive failed it.. but i can retake it again.. do you think you could help me with the questions? they are 11 questions and ive got more 3 hours to do it.. the test lasts one hour, if you help me out, i promess i will fully revise everything wen i get home..

11. Originally Posted by pitt
whats the final answer?? ive got 5 minutes to go, just give me any number plz, i dont understand this lol
There is also a shorter way to do considering the payments are constant.

$s_{\overline{10|}} = \frac{(1.04)^{10} - 1}{.04}$

Multiply that by your payment 1207, and you have the future value of an annuity.

12. Originally Posted by pitt
the test is finished, thanks for your help hehe.. ive failed it.. but i can retake it again.. do you think you could help me with the questions? they are 11 questions and ive got more 3 hours to do it.. the test lasts one hour, if you help me out, i promess i will fully revise everything wen i get home..
You should have learned this before hand instead of trying to have other people do you work. This forum isn't here to give you answers, but help you answer them yourself.

13. ye youre right but the formula that you gave us, we cant work them out.. my friend next to me said he could help me out with 9 questions if you help him out with other 2 but he doesnt know how to work out the formulas, its hard to understand

14. You invest £1,042 at the start of each year for the next 5 years at a fixed nominal rate of 2.2% interest, compounded continuously. How much will you have in 5 years?

more this one and im finnished

15. Originally Posted by pitt
ye youre right but the formula that you gave us, we cant work them out.. my friend next to me said he could help me out with 9 questions if you help him out with other 2 but he doesnt know how to work out the formulas, its hard to understand
The sum and the quick formula for annuities with constant payments are the methods to solve such a question.

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