Homework Help is Here – Start Your Trial Now!
Business
Finance
solution.    10. Compound Interest  An investment of P3M earns interest of 9% compounded continuously. What is the effective rate of interest?

solution.    10. Compound Interest  An investment of P3M earns interest of 9% compounded continuously. What is the effective rate of interest?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
See similar textbooks
icon
Related questions
Question

Answer the following Compound Interest problem using the provided formula ONLY. Show your complete solution. 

 

10. Compound Interest

 An investment of P3M earns interest of 9% compounded continuously. What is the effective rate of interest?

COMPOUND INTEREST - both the principal and and interest earn interest. "interest on top of interest" n F = P(1 + i)" where F = future worth at the end of n period P= present worth or n= period 1 = principal compound interest rate
Transcribed Image Text:COMPOUND INTEREST - both the principal and and interest earn interest. "interest on top of interest" n F = P(1 + i)" where F = future worth at the end of n period P= present worth or n= period 1 = principal compound interest rate
annual semiannual- quarterly bimonthly - ➜ m = 1 m = 2 m = 4 m = 6 mn F = P(1+1) m r = nominal interest rate m= number of compounding periuds per year mn n F = PCI + ² = PCI+ m
Transcribed Image Text:annual semiannual- quarterly bimonthly - ➜ m = 1 m = 2 m = 4 m = 6 mn F = P(1+1) m r = nominal interest rate m= number of compounding periuds per year mn n F = PCI + ² = PCI+ m
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Present Value
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS