PAIR 12 MOOVLY LINK

PAIR 12 MOOVLY LINK

Published on 3 November 2021

Pair 12 FDNBUSM Collaborative Exercise 2

Transcript
00:08
Number 3
00:09
If a certain principal is doubled in 16 years, what is the interest rate compounded quarterly at which it is invested?
00:16
GIVEN:
00:18
m=4  t=16
00:20
REQUIRED:
00:21
j=?
00:23
FORMULA:
00:24
n=tm
00:25
j=[( ) -1]m
00:25
F
00:25
_
00:25
P
00:29
SOLUTION:
00:30
Let P=15,000 and F=30,000
00:32
n=tm  n=16(4)  n=64
00:33
1
00:33
j=[( ) -1]4
00:33
_
00:33
n
00:33
30000
00:33
15000
00:34
_____
00:34
64
00:34
__
00:34
1
00:35
FINAL ANSWER
00:37
=0.0436 =4.36%
00:43
Number 5
00:43
What is the effective rate equivalent to a nominal rate of 5% compounded semi-annually?
00:48
GIVEN:
00:50
j=0.05 or 5%, m=2
00:53
REQUIRED:
00:55
w=?
00:56
FORMULA:
00:58
(1+  ) -1
00:59
j
00:59
_
00:59
m
00:59
m
01:01
SOLUTION:
01:04
(1+   ) -1
01:04
___
01:04
0.05
01:04
2
01:04
2
01:07
FINAL ANSWER
01:08
=0.0506 =5.06%