UCLA Annual Interest Worksheet

You are considering to invest in an annuity. You conclude that the present value of a 4-year, $400 ordinary annuity will exceed the present value of a 4-year, $400 annuity due.

You are investing in a fund that offers a nominal annual rate of 5%. Its effective rate will never be less than 5%.

You are investing in a fund that offers annual interest payments. Its effective, periodic, and nominal rates of interest will all be different.

You are investing in a fund that offers a nominal rate of 4% with semi-annual payments. Its effective rate that is smaller than 4%.