Time Periods for Investments Directions: For each question, compute the total nu
ID: 2724962 • Letter: T
Question
Time Periods for Investments
Directions: For each question, compute the total number of times in the life of the investment that interest is compounded or a payment is made AND compute the total frequency of this for one year of the investment’s life.
# Times in 1 Year
# of Times in Life of Investment
A savings account that will yield a return of 8% compounded annually.
We invest in an account that pays 6% compounded
bi-monthly for 10 years.
An annuity is received at the end of each year for the next seven years? How many times do you receive a payment?
The annual percentage rate on your credit card is based on interested that is compounded daily. Assume you have this credit card for 2 years.
You deposit money at the end of each year into an account drawing 6% interest how many times has the account earned interest after 10 years?
You have a $500 balance on your credit card today and it charges you 4% interest semi-annually. How many times have you been charged interest in 10 months?
A bond makes semi-annual interest payments for 10 years.
A bond that pays interest semi-annually, and matures in 11 years.
# Times in 1 Year
# of Times in Life of Investment
A savings account that will yield a return of 8% compounded annually.
We invest in an account that pays 6% compounded
bi-monthly for 10 years.
An annuity is received at the end of each year for the next seven years? How many times do you receive a payment?
The annual percentage rate on your credit card is based on interested that is compounded daily. Assume you have this credit card for 2 years.
You deposit money at the end of each year into an account drawing 6% interest how many times has the account earned interest after 10 years?
You have a $500 balance on your credit card today and it charges you 4% interest semi-annually. How many times have you been charged interest in 10 months?
A bond makes semi-annual interest payments for 10 years.
A bond that pays interest semi-annually, and matures in 11 years.
Explanation / Answer
# Times in 1 year # of Times in life of Investment A savings account that will yield a return of 8% compounded annually. 1 Since no number of year is given therefore it is asumed that it is for infinity We invest in an account that pays 6% compounded bi-monthly for 10 years. 2 20 An annuity is received at the end of each year for the next seven years? How many times do you receive a payment? 1 7 The annual percentage rate on your credit card is based on interested that is compounded daily. Assume you have this credit card for 2 years. 365 730 You deposit money at the end of each year into an account drawing 6% interest how many times has the account earned interest after 10 years? 1 10 You have a $500 balance on your credit card today and it charges you 4% interest semi-annually. How many times have you been charged interest in 10 months? 2 2 A bond makes semi-annual interest payments for 10 years. 2 20 A bond that pays interest semi-annually, and matures in 11 years. 2 22
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