Assuming the Interest Rate Offered for a 10 Year Investment

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Suppose that 3500 is borrowed for three years at an interest rate of 4 per year. All else equal What is the present value of 500 to be received in 5 years.

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Year and the other half in CDs which were yielding 3 per year compounded every 2 months.

. Year Investment X Investment Y 1 5000 11000 2 7000 9000 3 9000 7000 4 11000 5000. It claims the difference as budget savings this year. We can also find the future value by using FV function in excel.

The discount rate is 10 5 years. Estimate the annuity needed each year for the next 10 years assuming that the interest rate that can be earned on the money is 6. RM 1000 at 10 simple interest per annum.

Question 2 How much a simple interest would be earned on an investment of 1200 at 15 per annum for 10 years. What effective annual rate does each bank pay. If you deposit 5000 in each bank today how much will you have in each bank at the end of 1 year.

But A pays interest annually B pays semiannually C pays quarterly D pays monthly and E pays daily. You are offered 129505 per year for 10 years. 18 Suppose the term structure of interest rates is shown below.

We will get the answer 161051. A 4214 B 3612 C 3010 D 2408. PROJECT YEAR O YEAR 1 YEAR 2 YEAR 3 YEAR 4 COSTS 160000 43000 50000 50000 64000 BENEFITS 0 400000 400 000 500000 500000 a Calculate the NPV assuming 10 discount rate b Determine in which year will be the payback c Calculate ROI.

Term 1 year 2 years 3 years 5 years 10 years 20 years Rate EAR 500 480 460 450 425 415 The present value PV of receiving 1100 per year with certainty at the end of the next three years is closest to _____. Round to the nearest cent. For example if one person borrowed 100 from a bank at a simple interest rate of 10 per year for two years at the end of the two years the interest would come out to.

You have a piece of real estate for sale for 10000. Find the PV and the FV of an investment that pays 8 annually and makes the following end-of-year payments. But A pays interest annually B pays semiannually C pays quarterly D pays monthly and E pays daily.

The legislature changes the investment rate to 8 and recalculates the annuity needed to arrive at the future value. Assuming these rates are sustained how much will my investment be worth in 10 years. Five banks offer nominal rates of 6 on deposits.

The first promises to earn 15 compounded annually. You are offered three investments. At this rate earning can be found using the formula Ap110n where A is the total value of the investment P is the initial value of the investment and n is the math The value of an investment A in dollars after t years is given by the function At A0ekt.

Five banks offer nominal rates of 6 on deposits. PV 500 11 5 31046 10 years. 1 What effective annual rate does each bank pay.

Steve is offered an investment where for every 100 invested today he will receive 110 at the end of each of the next five years. Future value is 161051. To determine an interest payment simply multiply principal by the interest rate and the number of periods for which the loan remains active.

Round your answer to the nearest dollar. You have been offered an investment that will pay you 10000 in 10 years. PV 500 11 10 19277 PV Important Relationship II.

Suppose that 17000 is invested in a savings account paying 51 interest per year. This calculator determines the future value of 1k invested for 10 years at a constant yield of 1000 compounded annually. Which of the following investments has a higher present value assuming the same strictly positive interest rate applies to both investments.

A bank loans nominal interest rate will always be equal to or less than its effective annual rate. 1000501 1000 1500 𝐼5015 1200 900. For a given interest rate the longer the time period the lower the present value ceteris paribus.

The present value of a 5-year 250 annuity due will be lower than the PV of a similar ordinary annuity. After investing for 10 years at 10 interest your 1000 investment will have grown to 2594 How much will savings of 1000 be worth in 10 years if invested at a 1000 interest rate. Consider the following information about a project.

What is the most you would be willing to pay for this investment today based on this information. A Investment X has a higher present value. Using FV function in excel FV ratenperpmtpv type input the known values as rate 010 nper number of periods5 pmt 0 pv -1000 and enter.

Find the amount owed assuming no payments are made till the end. Steve concludes that in five years he will have 110 for every 100 invested and that this investment will increase his personal value. If you invest 100 at 10 simple interest how much money will you have in 10 years.

If an investment pays 10 interest compounded annually its effective annual rate will be less than 10. You think a 7 annual rate compounded annually is an appropriate rate of return or interest rate for this investment. What is the present value of this offer with an interest rate of 5.

Provide the detail answer for. B Investment Y has a higher present value. 100 10 2 years 20.

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