Register
Eckelberger Products Inc. makes high-speed recorders with high-speed scanning. The small company has been growing at an average rate of 70% per year for the past 4 years. The CEO asked you to convert the
254,086 views
32 votes
32 votes
Eckelberger Products Inc. makes high-speed recorders with high-speed scanning. The small company has been growing at an average rate of 70% per year for the past 4 years. The CEO asked you to convert the past growth rate into a semi-annually rate for its annual report. If the past growth rate was an effective rate, what was the effective growth rate semi-annually

User Brock Hensley
by
2.4k points

1 Answer

10 votes
10 votes

Answer: 30.4%

Step-by-step explanation:

The effective rate enables us see the rate of interest that is actually in operation due to being compounded over a certain period of time.

Effective rate can be calculated by the formula:

= (1 + annual rate) ^ (1 / number of compounding periods) - 1

= ( 1 + 70%)¹/² - 1

= 0.303840

= 30.4%

Compounding period is 2 as this is semi-annual.

User Abdullah BaMusa
by
2.6k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

1.6m questions

2.0m answers

Other Questions

If the rate of inflation in Japan dramatically increases while the rate of inflation in the United States remains constant, then a. the demand curve for dollars shifts to the left. b. the demand curve
The market value of the equity of Hudgins, Inc., is $582,000. The balance sheet shows $21,000 in cash and $192,000 in debt, while the income statement has EBIT of $93,000 and a total of $137,000 in depreciation
Kylie is risk averse and has $1,000 with which to make a financial investment. She has three options. Option A is a risk-free government bond that pays 5 percent interest each year for two years. Option
Elroy Rocket is entering his senior year as an accounting major and has a number of options for his summer break. His options for the 3 month break follow: (1) Work full time at a local accounting firm
In January of the current year, Dora made a gift of stock to her granddaughter. At the time of the gift, the stock was worth $15,000. Several months later in the same year after the gift, a $500 dividend
Link Copied!