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Mathematics Clinic => Grade 11 and 12 Mathematics => Topic started by: robinn137 on Jun 6, 2019

Title: Note: The calculations for this question were done using Excel's RATE function.What is the nominal ...
Post by: robinn137 on Jun 6, 2019

Question 1

Note: The calculations for this question were done using Excel's RATE function.
An insurance policy provides for a lump sum benefit of $450 000.00 fifteen years from now. Alternatively, payments of $25700.00 may be received at the beginning of each of the next fifteen years. What is the effective rate of interest if interest is compounded quarterly?

Question 2

Note: The calculations for this question were done using Excel's RATE function.
What is the nominal annual rate of interest charged quarterly on a lease valued at $2340.00 if payments of $240.00 are made at the beginning of every three months for 3.25 years?

Title: Note: The calculations for this question were done using Excel's RATE function.What is the nominal ...
Post by: emilymalinowski12 on Jun 6, 2019

Answer 1

Nper 15
Pmt = -25700.00
FV = 450000.00
Type 1
Result  0.019101047
The effective annual rate is 1.9101047%

Answer 2

Nper 13
Pmt -240.00
PV 2340.00
Type 1
Result 0 .0522876
Nominal annual rate = 5.22876% × 4 = 20.91503%