Civil and Environmental Engineering Answers

Select the best of the following five alternatives. Assume the investment is for a period of 4 years and P = $10,000.
a. 11.98% interest rate compounded continuously
b. 12.00% interest rate compounded daily
c. 12.01% interest rate compounded monthly
d. 12.02% interest rate compounded quarterly
e. 12.03% interest rate compounded yearly

Mr. Sansome withdrew $1000 from a savings account and invested it in common stock. At the end of 5 years, he sold the stock and received a check for $1307. If Mr. Sansome had left his $1000 in the savings account, he would have received an interest rate of 5%, compounded quarterly. Mr. Sansome would like to compute a comparable interest rate on his common stock investment. Based on quarterly compounding, what nominal annual interest rate did Mr. Sansome receive on his investment in stock?

At the Central Furniture Company, customers who buy on credit pay an effective annual interest rate of 16.1%, based on monthly compounding. What is the nominal annual interest rate that they pay?

A bank advertises it pays 7% annual interest, compounded daily, on savings accounts, provided the money is left in the account for 4 years. What is the effective annual interest rate?

What interest rate, compounded quarterly, is equivalent to a 9.31% effective interest rate?

A local store charges 11/2% each month on the unpaid balance for its charge account. What nominal annual interest rate is being charged? What is the effective interest rate?

If the nominal annual interest rate is 12% compounded quarterly, what is the effective annual interest rate?

One thousand dollars is borrowed for one year at an interest rate of 1% per month. If the same sum of money could be borrowed for the same period at an interest rate of 12% per year, how much could be saved in interest charges?

What sum of money now is equivalent to $8250 two years later, if interest is 4% per 6-month period?

A savings account earns 8% interest. If $1000 is invested, how many years is it until each of the following amounts is on deposit?
a. $1360
b. $2720
c. $4316
d. $6848