- Problem 1 6 Points Given A Nominal Annual Rate Of 8 With Six Monthly Compounding Explain How To Calculate A The Eq 1 (80.16 KiB) Viewed 15 times
Problem 1 [6 points] Given a nominal annual rate of 8% with six-monthly compounding, explain how to calculate: a. The equivalent effective annual rate b. The equivalent effective quarterly rate c. The equivalent effective daily rate Problem 2 [6 points] What is the present value of a bond maturing in 20 years with a face value of $10,000 and a coupon rate of 4%? Your interest rate is 14% nominal annual with 6-month compounding. Remember to draw a cash flow diagram. Problem 3. [6 points] A bond has a face value of $8,000 and a life of 10 years; it is on sale for $6000. Explain how you would find out the minimum coupon rate for that bond (then find its value with Excel) so it is worth buying if your MARR is 14% nominal annual with six-monthly compounding.