Hi,
Uuum, can anyone tell me how to solve for ‘r’ using the BAII Plus Prof?
Thank you!作者: draz 时间: 2013-4-7 06:30
Thanks! Here it is:
A client is confused about two terms on some certificate of deposit rates quoted at his bank in the US. You explain that the stated annual rate is a rate that does not take into account compounding within a year. The rate his bank calls APY (annual percentage yield) is the effective annual rate taking into account compounding. The bank’s customer service rep mentioned monthly compounding, with $1000 becoming $1061.68 at the end of a year. To prepare to explain the terms to your client, calculate the stated annual interest rate that the bank must be quoting.
I can’t figure out how to solve for this using my calculator. Thanks!作者: Nishant1 时间: 2013-4-7 06:32
The answer should work out to 6%. The textbook shows how to solve for it but not with my calculator ….作者: TheMBAGlover 时间: 2013-4-7 06:33
Okay, yeah that makes sense.
so you need to get the rate with the monthly compounding which is what they give you, so (1061.68/1000) 1 = 6.168%
so thats the rate using monthly componding, they want the annual rate so:
(1.06168)^ 1/12 = .005 percent. Thats the monthly rate * 12 months = 6.0作者: firat 时间: 2013-4-7 06:34
Gooner: “bank’s customer service rep mentioned monthly compounding”
To solve this using a calculator I entered..
12 N
1000 PV
1061.68 FV
CPT I/Y 0.50002
thats the monthly rate.. now multiply that by 12 to get the stated annual rate.
