A bank proudly announces that it has changed its interest computation method to continuous compounding. Now $2000

Question:

A bank proudly announces that it has changed its interest computation method to continuous compounding. Now $2000 left in the bank for 9 years will double to $4000.

(a) What nominal interest rate, compounded continuously, is the bank paying?

(b) What effective interest rate is it paying?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Engineering Economics

ISBN: 9780195168075

9th Edition

Authors: Ted G. Feller

See More Books

Question Posted: Feb 25, 2010 02:04 AM

See More Questions

What quarterly compounded nominal rate and effective rate of interest are being charged on a $5000 loan if quarterly payments of $302.07 will repay the loan in 5 years
What annual nominal rate compounded continuously has the same annual percentage yield as 6% compounded monthly?
What rate of interest with continuous compounding is equivalent to 15% per annum with monthly compounding?
1. What are the four basic types of unemployment? Which type is most pronounced during difficult economic times such as we have been experiencing during the last few years? Which type is most...
Match the cubic function with the numbers of rational and irrational zeros. (a) Rational zeros: 0; irrational zeros: 1 (b) Rational zeros: 3; irrational zeros: 0 (c) Rational zeros: 1; irrational...
Yamachi and Nadler of Hawaii has a gross income of $7.5 million for the year. Depreciation and operating expenses total $4.3 million. The combined state and local tax rate is 7.2%. If an effective...
Consider the plot of power as a function of effect size for the two-sample t-test shown in Figure 4.3. a. Create a plot to show power as a function of both effect size and sample size while keeping...
Prepare a tax return for Charlie and Cindy Clergy. Charlie Clergy (age 44, DOB: 5/2/76, SSN: 453-00-9863), whose Form W-2s and 1099s follow, is an ordained minister in the Episcopal Church. His wife,...
On June 3 0 , Indigo Corporation discontinued its operations in Mexico. During the year, the operating income was $ 2 1 0 , 0 0 0 before taxes. On September 1 , Indigo disposed of the Mexico facility...
The distribution of the x-component of the velocity u of a fluid near a flat surface is measured as a function of the distance y from the surface: u(y) y (m) 0.002 0.004 0.006 0.008 Try x u (m/s)...
An insurance company is offering to sell an annuity for $20,000 cash. In return the firm will guarantee to pay the purchaser 20 annual end-of-year payments, with the first payment amounting to $1100....
Fifteen families live in Willow Canyon. Although several water wells have been drilled, none has produced water. The residents take turns driving a water truck to a fire hydrant in a nearby town....
The 2020 financial statements of Green Company include the following statement of cash flows: Required a. Did Green Company increase or decrease its current assets, other than cash, during 2020? Is...
The following table is a report of the first quarter of 20XX (January-March) from a 400-bed medical center regarding its insurance categories. In this example, deaths are included in discharges....
A ring of charge is centered at the origin in the vertical direction. The ring has a charge density of = 4.97 x 10-6 C/m and a radius of R = 1.45 cm. Find the total electric field, E, of the ring at...
Only one of the following three statements is a set identity, in the sense that it holds for all sets A, B, C, and D. Find it and prove it. (A x B) \(C x D) = (A \ C) (B \ D) (A x B)n (C x D) =...
Consider the following reaction. What would be the equilibrium constant expression? 4Br2(g) + CH4(9) 4HBr(g) + CBr4(g)
2. The relationship between the mass and the volume of the materials are given in the table below a. b. Volume(cm) C. 180.4 120.3 75.5 39.6 24.1 11.2 6.8 Mass (g) 68 47 29 15 9.2 4.2 2.4 Graph (M vs...
A positively charged thin cylindrical shell of length $10 \mathrm{~m}$ and radius $50 \mathrm{~mm}$ has no end caps and a uniform surface charge density of \(9 \times 10^{-9} \mathrm{C} /...
Calculate the number of neutrons of 239Pu.
The Federal Open Market Committee (FOMC) meets about every six weeks to assess the state of the economy and to decide what actions the central bank should take. The minutes of this meeting are...
The Dallas Machine Shop expects to have an annual taxable income of $425,000 from its regular business over the next six years. The company is considering acquiring a new milling machine during year...
The Columbus Electrical Company expects to have an annual taxable income of $650,000 from its residential accounts over the next two years. The company is bidding on a two-year wiring service for a...
The Florida Citrus Corporation estimates its taxable income for next year at $2,500,000. The company is considering expanding its product line by introducing pineapple-orange juice for the next year....
The Morrit Corporation has $1,200,000 of debt outstanding, and it pays an interest rate of 8% annually. Morrit's annual sales are $6 million, its average tax rate is 25%, and its net profit margin on...
As an Investor, if I purchase a Corp Bond with a Coupon rate of 9%, and I am in the 30% tax bracket, effectively what rate will I be earning? Hint: If I purchased a Muni-Bond with an 8% Coupon rate,...
How can performance management systems be used to identify and nurture high-potential talent within the organization ?

A bank proudly announces that it has changed its interest computation method to continuous compounding. Now $2000

Question:

Step by Step Answer:

a Using Equation 439 F Pe rn 4000 2...View the full answer

Engineering Economics

Students also viewed these Economics questions