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Unformatted text preview: interest is 8% 2.45 In computing the equivalent present worth of each of the given cash flow series at period zero, which of the following expressions is incorrect. a) P = $100 (P/A, i, 4) (P/F, i, 4) b) P = $100 (F/A, i, 4) (P/F, i, 7) c) P = $100 (P/A, i, 7) - $100 (P/A, i, 3) d) P = $100 [(P/F, i, 4) + (P/F, i, 5) + (P/F, i, 6) + (P/F, i, 7)] 2.52 Consider the accompanying cash flow diagram. What value of C makes the inflow series equivalent to the outflow series at an interest rate of 12% compounded annually? (answer: $781.3) Nominal and Effective Interest, Compounding 3.2 A department store has offered you a credit card that charges interest at 0.95% per month, compounded monthly. What is the nominal interest (annual percentage) rate for this credit card? What is the effective annual interest rate? (answer: 12.01%) 0 1 2 3 4 5 6 7 8 2C C C C C C C C 1200 800...
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- Spring '12