Calculate the effective interest rate

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1. If a company's inventory turnover ratio is 24, how long is the firm's inventory conversion period if you use a 360-day year?

2. To finish college, you need $18,000 per year for 4 years, starting next year (that is, you will need to withdraw $18,000 one year from today). A relative offers to pay the expense by depositing in a bank time deposit paying 5 percent interest a sum of money that is sufficient to provide the four payments of $18,000 each. How much money do you have in the account after the first withdrawal?

3. A credit union offers a savings account with the interest rate of 10% compounded daily. What is the effective interest rate if you use 360-day year?

4. As a lottery winner you are going to receive $10,000 every year forever, starting one year from today. If the appropriate discount rate is 10%, what is the present value of the award cash flows?

Reference no: EM1353370

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