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Study on Time Value of Money

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Added on  2020-05-04

Study on Time Value of Money

   Added on 2020-05-04

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Running head: TIME VALUE OF MONEYTime value of moneyName of the student:Name of the University:Authors Note:
Study on Time Value of Money_1
TIME VALUE OF MONEY1Answer to Question 1The formula that is used for calculating the effective interest rate is given below:Effective interest rate= (1+r/m)m -1 R is the rate of interest.M is the number of times per year.Statement showing calculation of effective interest rateAccountAnnualInterest Rate(R )CompoundedperiodTimes Per Year (M)Effective Interest rateA10%Annually110%B12%Monthly1213%C12%Bimester613%D8%Quarterly48%E10%Semi-annually210%F12%Quarterly413%The future value of the money is calculated using the formula:FV= Present value (1+rate of interest)^number of timesStatement showing calculation of compounded amountAccountAmountDeposited(EUROS)AnnualInterest Rate(R )Deposit periodNumber ofpaymentperiodCompounded AmountA1,00010%1010$2,593.74 B95,00012%112$370,117.72 C8,00012%212$31,167.81 D120,0008%28$222,111.63 E30,00010%48$64,307.66 F15,00012%312$58,439.64
Study on Time Value of Money_2

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