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# Effective return of an investment account

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What is the effective return of an investment account that pays a 9.9 APR compounded daily (for 365 days)?

Okay let's say the annual interest rate is 10%.
a.) What would be the present value of a 5-year ordinary annuity with annual payments of \$200?
b.)What is the present value if it is a 5-year annuity due (all the rest is the same)?

What is the value of a preferred stock that pays a \$1 dividend if the required rate of return for this stock is 4%?

#### Solution Preview

What is the effective return of an investment account that pays a 9.9 APR compounded daily (for 365 days)?
payment = 9.9% / 365 = 0.00027
PV = -1
Number of periods = 365
Then by a financial calculator, we can compute:
Interest ...

#### Solution Summary

The effective returns on an investment accounts is provided. The value of a preferred stock that pays dividends are examined.

\$2.49