Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Determine the future value of Rs.1000 compounded continuously for 5 year on the interest rate of 12 percent per year and contrast it along with annual compounding.
Solution:
FV=5 = PVeN(APR)
= 1000 * 2.71828
= 1000 * 2.71828.60
= 1000 * 1.82212
FV=5 = PV (1 + k)n
= 1000 (1 + .12)5
= 1000 (1.7623)
= 1762.3
From this illustration you can very well notice the effects of extreme frequency of compounding.
until now in our discussion we have supposed that the interest rate is going to stay the same over the life of the investment, although now a days we are witnessing an raised volatility in interest rates as a effect of that the financial instruments are designed in a manner that interest rates are benchmarked to a specific variable and along with the change in which variable the interest rates also change consequently.
In that case the Future Value is calculated by this equation:
FVn = PV(1 + k1 ) (1 + k2 ) (1 + k3 ) + ... (1 + kn )
Here kn is the interest rate for period n.
Financial Institution - Organization engaged in any of the many aspects of finance involving thrift institutions, commercial banks, securities brokers, investment banks and dealers
Question: The following information was extracted from the books of William Noel for the year ended 30 April 2009.
Van Aalst Company's comparative balance sheet and income statement for last year appear below: Comparative Balance Sheet
In January, 2008, Sanford Corporation purchased a patent for a new product for $1,200,000. The patent was valid for fifteen years but it was estimated to have a useful life of ten
hw
Common stocks A, B, C, and D had the following quarterly returns. A B C D 0.07 0.05 0.07 0.12
The current stock price of IOU is $250 and has a standard deviation of 35% per year. The risk-free interest rate is 5% per year compounded continuously. Find the prices of a call a
In spite of the ordinary shares ranking last in terms of assets sharing in the event of liquidation, they attract more investors than any other type of shares. Why do you think thi
Bankrupt person A bankrupt is a person against whom an adjudication order has been made by the court primarily on the grounds of his insolvency. Any person (other than a body c
Is goodwill a fictitious asset?
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd