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7-9)
n1 =4 n1 =2
4 2
j 0.06
{ }
1+
4
−1= 1+ { 2 }
−1
j = 0.0596
j = 5.96% compounded quarterly
ANSWER: Remark 6% compound semi – annually = 5.96% compounded quarterly.
where,
i = 1.0% per quarter = 0.01
n1 =4
so,
i e =( 1+0.01 )4 −1
i e =0.0406∨4.06 %
ANSWER: i e =0.0406∨4.06 %
where,
P = P 5,000
j = 8% compounded quarterly
n1 =4
j 8%
i= = =2 % per quarter=0.02
n1 4
n =? quarter
n = 10 years ( 4 qyear
uarters
)=40 quarters
so,
40
F=5,000 ( 1+ 0.02 )
F=P 11,040.20
Using Formula 1-2,
F=P+ I
I =F−P
I =11,040.20−5,000
I =P 6,040.20
ANSWER: I =P 6,040.20
Let, x=P
4 x=F
n1 =2
7%
i= =3.5% per semi−annual period
2
n=? semi−annual periods
so,
n
4 x=x ( 1+0.035 )
n
4= (1.035 )
ln 4=n ln 1.035
ln 4
n= =40.29 semi−annual periods∈ years
ln 1.035
1 year
n=( 40.29 semi−annual periods ) {2 semi−annual periods }
n=20.15 years