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1. If an investment of $24,500 twenty-four years ago is now worth $55,000, at what rate, compounded semi-annually, did it earn? What is the nominal rate, effective rate and real interest rate if inflation is 4.6% (base rate: nominal interest rate)? 2. $15,000 was due on November 3, 2006. If money is worth 14% compounded semi-annually, the loan was released in November 3, 2002? (a.)What is the nominal rate? (b) What is the effective rate? ((c) What is the real interest rate if inflation rate is 4.6% (base rate: nominal interest rate) to find the effective rate w: w = (1+r/m)^m 1 to find the nominal rater corresponding to an effective rate w: r = m[(1+w)/m 1]

1. If an investment of $24,500 twenty-four years ago is now worth $55,000, at what rate, compounded semi-annually, did it earn? What is the nominal rate, effective rate and real interest rate if inflation is 4.6% (base rate: nominal interest rate)? 2. $15,000 was due on November 3, 2006. If money is worth 14% compounded semi-annually, the loan was released in November 3, 2002? (a.)What is the nominal rate? (b) What is the effective rate? (c) What is the real interest rate if inflation rate is 4.6% (base rate: nominal interest rate) to find the effective rate w: W = (1+r/m)" - 1 to find the nominal rate r corresponding to an effective rate w: r = m[(1+w)1/m - 1]

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