Question 86996: I need help with these problems.. plese show me how to solve them...thanks....
Problem# 4
Find the effective rate corresponding to the given nominal
18% compounded quarterly.
Problem# 7
Find the future value of the ordinary annuity.
If R =$2,500, I = 5% interest compounded quarterly for 16 years
Problem# 10
Find the present value of the ordinary annuity.
Payments of $17,000 made annually for 10 years at 12% compounded annually.
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Find the effective rate corresponding to the given nominal
18% compounded quarterly.
(1.r/n)^(n)
(1+0.18/4)^4
= (1+0.045)^4
= (1.1925)
The effective rate is 19.25%
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Problem# 7
Find the future value of the ordinary annuity.
If R =$2,500, I = 5% interest compounded quarterly for 16 years
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Formula: S = R[(1+i)^n -1]/i
S = 2500[(1+0.05/4)^4 - 1]/[0.05/4]
S = 2500[1.0125^4 -1]/[0.0125]
S = 2500[0.050945]/[0.0125]
S = 2500(4.0756269..
S = $10,189.07
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Problem# 10
Find the present value of the ordinary annuity.
Payments of $17,000 made annually for 10 years at 12% compounded annually.
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Formula: A = R[1 - (1+i)^-n]/i
A = 17000[1 - (1.12)^(-10)]/0.12
A = 17000[5.650223]
A = $96,053.79
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Cheers,
Stan H.
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