Reference no: EM13815168
1. Describe the difference between nominal, effective and real interest and calculate what is owed after 5 years for the following example. 10% interest on $100 over the course of 5 years. Where relevant, the compounding period is 1 year. Inflation is 5%.
2. Calculate the simple interest applied to a loan with principal balance of $2,000 and a 7.3% interest rate after 16 years. Once you have the interest owed, give the total amount owed to pay off the loan.
3. Upload an image of a graph that represents a balance with simple and compound interest. Time should be the x axis and the total balance should be the y axis. Units do not need to be labelled.
4. Given an 8% effective interest rate, how much would you owe on a $15,000 loan after 2 years if it was compounded continuously?
5. If there is an inflation rate of 6.5% and a nominal rate of 9.3%, what is the real rate?
6. Calculate the present value of an investment if it will be worth $440,000 in 7 years with an annual interest rate of 3.5%.
7. If a loan's principal was $290,000 and the amount paid after 5 years was $400,000, what was the nominal interest rate?
8. You receive a $30,000 loan from a bank that must be paid off in 5 years. How much will you pay then if the loan has a nominal interest rate of 3% that is compounded daily?
9. If you invest $90,000 in a bond with nominal interest rate of 3%, how much profit will you make after 3 years?
10. Given the situation in question 9, what would the profit be if there is an inflation rate of 3.2% over the 3 years?
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Describe difference between nominal-effective-real interest
: Describe the difference between nominal, effective and real interest and calculate what is owed after 5 years for the following example. 10% interest on $100 over the course of 5 years. Where relevant, the compounding period is 1 year. Inflation is 5..
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