Calculate effective annual interest rate

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Reference no: EM133017722

Question#1:

A. Distinguish between Effective Annual Interest Rate (EAR) and Annual Percentage Rate (APR)?

- EAR:

- APR:

B. For a monthly rate of 1.5%, Calculate Effective Annual Interest Rate (EAR) and Annual Percentage Rate (APR)?

- EAR =

- APR =

Z]
}}}g

Question#2:

Explain the relationship between the interest rate (YTM) and the bond price, use examples to prove your answer?

- Relationship:

- Example No.1

- Example No.2

- Comment:

aAW

Question#3:

Use the following table to calculate the discounted payback period if the discount rate i=10%?

T

Cash Out-Flow

Cash In-Flow

0

500,000

 

1

 

120,000

2

 

130,000

3

 

200,000

4

 

70,000

5

 

80,000

6

 

150,000

Attachment:- Corporate Finance.rar

Reference no: EM133017722

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