A person opens a bank account with a deposit of $150. At
the end of 3 years, there is $179.34 in the account. What nominal interest
rate compounded quarterly was earned on the investment?
Answer:
N
=
3
I/Y =
?
PV =
$150
PMT =
$0
FV =
$179.34
2ND
I/Y
P/Y =
1
C/Y =
4
CPT & I/Y =
6.14%
2) Question
A deposit of $1500 earned $672.45 interest over 7 and ½
years. What nominal interest rate compounded semi-annually was paid on
the deposit?
Answer:
N
=
7.5
I/Y =
?
PV =
-$1,500
PMT =
$0
FV =
$2,172.45
2ND
I/Y
P/Y =
1
C/Y =
2
CPT & I/Y =
5%
3. Question
A principal of $7100 has maturity value of $13,966.70 in
10 years. If the interest rate is compounded annually, what is the nominal
rate?
Answer:
N
=
10
I/Y =
?
PV =
-$7,100
PMT =
$0
FV =
$13,966.70
2ND
I/Y
P/Y =
1
C/Y =
1
CPT & I/Y =
6.999% (7%)
4. Question
A present value of $1301.69 has a future value of $2569.26
in 7 years and 7 months. What is the nominal rate compounded monthly?
Note: 7 years and 7 months = (7 x 12 months) + 7 months = 91 months
Answer:
N
=
91
I/Y =
?
PV =
-$1,301.69
PMT =
$0
FV =
$2,569.26
2ND
I/Y
P/Y =
12
C/Y =
12
CPT & I/Y =
9%
5. Question
At what nominal rate compounded quarterly will money double
in 7 and ½ years?
N
=
7.5
I/Y =
?
PV =
-$100
PMT =
$0
FV =
$200
2ND
I/Y
P/Y =
1
C/Y =
4
CPT & I/Y =
9.35%
6. Question
At what nominal rate compounded monthly will money double
in 6 years?
N
=
6
I/Y =
?
PV =
-$100
PMT =
$0
FV =
$200
2ND
I/Y
P/Y =
1
C/Y =
12
CPT & I/Y =
11.61%
7. Question
At what nominal rate compounded semi-annually will money
triple in 9 and ½ years?
