Unformatted text preview: What minimum nominal annual rate must Bank B pay in order to be as attractive as Bank A? Assume we have 365 days in one year. Q5. If the eﬀective annual rate of discount is 8%, for how long do you need to invest a principal of $500 so that it will accumulate to $750? Q6. Consider a 4year investment with an annual simple discount rate of 10%. Find the equivalent annual simple interest rate i over the same investment period. Q7. Latisha wishes to obtain $4,000 to pay her college tuition now. She qualiﬁes for a loan with a level annual eﬀective discount rate of 3.5%. (a) How much will she have to repay if the loan term is six years? (b) What is the annual eﬀective interest rate of Latisha’s loan? Q8. Suppose we have compound interest and an eﬀective monthly interest rate of 0.5%. Find equivalent rates i (12) , i , and d . 1...
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 Fall '09
 Chisholm
 Interest, Nominal Interest Rate, Annual rate, Latisha

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