Interest

Related BrainMass Solutions

• Choosing Between Two Financing Options

  interest payment $2.25 7 Coupon interest payment $2.25 8 Coupon interest payment $2.25 9 Coupon interest payment $2.25 10 Coupon interest payment $2.25 11 Coupon interest payment $2.25 12 Coupon interest payment $2.25

• Calculating Bond Yields

  coupon interest 18 $40 coupon interest 19 $40 coupon interest 20 $40 coupon interest 21 $40 coupon interest 22 $40 coupon interest

• Calculating effective and nominal interest rates

  521381 Effective and Nominal Annual Interest 1. What is the effective interest rate if nominal annual interest is 14.8% computed monthly? 2. What is the effective interest rate if nominal annual interest is 12.68% computed continuously? 3.

• Time Value of Money (TVM)

  Simple interest = Principal x Interest rate x Time = $1,000 x 4% x 10 years = $400 Amount in the account after 10 years with simple interest = principal + interest =$1000 + $400 = $1,400 Compound interest: Amount = Principal x (1+ interest rate)

• Question about Effective interest method

  Under the effective interest method, interest expense is calculated as Carrying value of bonds X market interest rate Premium amortization = Cash interest paid - interest expense For the first semi annual interest Interest expense = 5,368,035 X 12%

• This posting addresses nominal and real interest rates.

  A nominal interest rate is the rate of interest before considering any form of inflation.

• Issuance of bonds and payment of interest

  are issued with accrued interest, the interest payable account is credited since this interest would be paid on the interest payment date.

• Times-interest-earned ratio/fixed-charge-coverage ratio

  interest earned ratio = EBIT /Interest =Income before interest and taxes / Interest =$60000/$12000 =5 times Fixed charges coverage ratio = (EBIT +Fixed charges other than interest / Interest + Fixed charges)/(Interest + Fixed charges other than

• Effects of Interest Rates on Future and Present Value

  Simple interest is interest on the principle amount while compound interest is when your principle and any earned interest earned interest. The interest rate is applied to the original principle and any accumulated interest.

• Effective Interest Rate on a Discount Interest Loan

  457422 Effective Interest Rate on a Discount Interest Loan In a discount interest loan, you pay the interest payment up front.