User Account

All Pages

Calculate the effective annual rate

Assignment Help Finance Basics
Reference no: EM131101107

You take out a loan to buy a brand new car. The finance guy at the car dealership tells you the APR is 8%. Calculate the Effective Annual Rate (EAR) if the interest compounds annually, quarterly, monthly AND continuously.

  • Annual Compounding = ( 1 + 0.08 / 1 ) ^ 1 - 1 = 0.08 = 8%
  • Quarterly Compounding = (1 + 0.08 / 4 ) ^ 4 - 1 = 0.0824 = 8.24%
  • Monthly Compounding = (1 + 0.08 / 12 ) ^ 12 - 1 = 0.083 = 8.3%
  • Continuous Compounding = e ^ 0.08 - 1 = 0.0833 = 8.33%

Reference no: EM131101107

Questions Cloud

Define capital budgeting regular payback period : Define each of the following terms: a. Capital budgeting; regular payback period; discounted payback period b. Independent projects; mutually exclusive projects c. DCF techniques; net present value (NPV) method; internal rate of return (IRR) method d..
Combating racial discrimination : Combating racial discrimination at work as well while getting a job, today people faced there is not inequality between others for example, wages and treatment regarding race or ethnicity. We have to end this social problem by any ways we can do.
What is the after-tax cost of debt : Suppose a company will issue new 20-year debt with a par value of $1,000 and a coupon rate of 9 percent, paid annually. The tax rate is 40 percent. If the flotation cost is 2 percent of the issue proceeds, what is the after-tax cost of debt?
Indicate the type of responsibility center involved cost : Required:for each of the above independent scenarios indicate the type of responsibility center involved cost, revenue, profit,or investment.
Calculate the effective annual rate : You take out a loan to buy a brand new car. The finance guy at the car dealership tells you the APR is 8%. Calculate the Effective Annual Rate (EAR) if the interest compounds annually, quarterly, monthly AND continuously.
Which hopes to rival holiday inn on the national scene : A summary of the balance sheet of Travelers Inn Inc. (TII), a company which was formed by merging a number of regional motel chains and which hopes to rival Holiday Inn on the national scene, is shown in the table: Travelers Inn: December 31, 2004 (M..
Reprinted by the permission of russell & volkening : I Know Why the Caged Bird Sings by Angelou, Maya. Copyright 1969 by Nelson Thornes Ltd. Reprinted by permission of Nelson Thornes Ltd. via the Copyright Clearance Center.
Which is most true regarding performance appraisals : She received more negative evaluations over a period of three years after a new supervisor was hired, though the more stringent requirements that were applied to her were not applied to white employees. After 3 years, the employee was then select..
What is the projects irr : Jella cosmetics is considering a project that costs $750,000 and is expected to last for 9 years and produce future cash flows of $180,000 per year. If the appropriate discount rate for this project is 17 percent, what is the projects IRR?

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate thelma and louie net income for the year

Thelma and Louie, Inc., started the year with a balance of retained earnings of $547 million and ended the year with retained earnings of $594 million. The company paid dividends of $37 million to the preferred stockholders and $77 million to comm..

  Describe the procedures prescribed by us gaap and ifrs

Describe the procedures prescribed by U.S. GAAP and IFRS to test for goodwill impairment. How do these procedures differ from the procedure followed for testing the impairment of a patent?

  Calculate the net advantage to leasing

How would your answer to part a change if the lessee did not expect to pay any income taxes for the next three years but to pay income taxes each year thereafter at a 40% rate?

  Compute sustainable rate of growth

Compute sustainable rate of growth and the total asset turnover is 1.40 and the equity multiplier is 1.50

  We want to determine if on the average students at

question 1. independent random samples taken on two university campuses revealed the following information concerning

  Calculate the bond price

In February 2009 Treasury 6s of 2026 offered a semiannually compounded yield of 3.5965%. Recognizing that coupons are paid semiannually, calculate the bond's price.

  Characteristics of standard normal distribution

What are the characteristics of standard normal distribution? The HR department of an organization collects data on employees: age, salary, level of education, gender, and ethnicity. Which data do you think is more likely to follow normal distribu..

  Estimate discount rate and perpetual growth rate

Estimate Discount Rate and Perpetual Growth Rate. To value Webjet from the free cash flows, you need to estimate the weighted average cost of capital (WACC) and the long-run free cash flow growth rate.

  Find company cost of capital

A firm is 40% financed by risk-free debt. The interest rate is 10 percent, the expected market risk premium is 8 percent, and the beta of the company's stock is .5.

  Compute the number of shares required

Assume that you have $500,000 to invest in equities and want to establish a new portfolio that includes ten (10) stocks to be selected from the Dow Jones Industrial Average of 30 companies.  It is also desired to start with nearly equal dollar values..

  What was the annual increase in the value of the certificate

In 2009, a $5 certificate from 1896 was sold for $10,500. What was the annual increase in the value of the certificate?

  In fiscal year 2011 starbucks corporation sbux had revenue

in fiscal year 2011 starbucks corporation sbux had revenue of 11.70 billion gross profit of 6.75 billion and net income

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd