Finance Challenge 03

Suppose you deposit $1,000 today (t = 0) in a bank account that pays an interest rate of 7% per year. If you keep the account for 5 years before you withdraw all the money, how much will you be able to withdraw after 5 years?   Calculate using formula. Calculate using year-by-year approach.   Find the present value of a security that will pay $2,500 in 4 years. The opportunity cost (interest rate that you could earn from alternative investments) is 5%.   Calculate using the formula. Calculate using year-by-year discounting approach.   Solve for the unknown in each of the following:   Present value Years Interest rate Future value $50,000 12 ? $152,184 $21,400 30 ? $575,000 $16,500 ? 14% $238,830 $21,400 ? 9% $213,000   Suppose you enter into a monthly deposit scheme with Chase, where you have your salary account. The bank will deduct $25 from your salary account every month and the first payment (deduction) will be made…

You are considering a safe investment opportunity that requires a $780 investment​ today, and will pay $870 two years from now and another $640 five years from now. a. What is the IRR of this​ investment? b. If you are choosing between this investment and putting your money in a safe bank account that pays an EAR of 5% per year for any​ horizon, can you make the decision by simply comparing this EAR with the IRR of the​ investment? Explain.

(Related to Checkpoint 5.6) (Solving for i) You are considering investing in a security that will pay you $4,000 in 26 years. a. If the appropriate discount rate is 12 percent, what is the present value of this investment? b. Assume these investments sell for $2,348 in return for which you receive $4,000 in 26 years. What is the rate of return investors earn on this investment if they buy it for $2,348? a. If the appropriate discount rate is 12 percent, the present value of this investment is $ (Round to the nearest cent.)

You are considering a safe investment opportunity that requires a $1,080 investment​ today, and will pay $710 two years from now and another $610 five years from now. a. What is the IRR of this​ investment? b. If you are choosing between this investment and putting your money in a safe bank account that pays an EAR of 5% per year for any​ horizon, can you make the decision by simply comparing this EAR with the IRR of the​ investment? Explain. a. What is the IRR of this​ investment?   The IRR of this investment is _____________%. ​ (Round to two decimal​ places.)

The amount the bank is willing to loan you to start your business is not enough to cover the initial investment you need to make. You need an additional $10,000. You approach an investor and ask him to invest $10,000 in your business. In return, you offer to pay him $500 out of your profits at the end of years 1-4 and an amount X at the end of year 5. The investor's annual cost of funds is 10%. How big must X be to induce him to invest in your business?

You are considering investing in a security that will pay you $2,000 in 35 years.   a.  If the appropriate discount rate is 10 percent​, what is the present value of this​ investment? b.  Assume these investments sell for ​$275 in return for which you receive ​$2,000 in 35 years. What is the rate of return investors earn on this investment if they buy it for ​$275​?

You are considering an investment manufacturing cocoa powder. This investment needs $185,000 today and expects to repay you $200,000 in a year from now. What is the IRR of this investment opportunity? Given the riskiness of the investment opportunity, your discount rate is 11%. What does the IRR rule say about whether you should invest? a. The IRR is 7.5%. The IRR rule says that you should not invest. b. The IRR is 8.11%. The IRR rule says that you should not invest. c. The IRR is 1.2%. The IRR rule says that you should not invest. d. The IRR is 16.8%. The IRR rule says that you should invest.

You are considering a safe investment opportunity that requires a $1,410 investment today, and will p $780 two years from now and another $830 five years from now. a. What is the IRR of this investment? b. If you are choosing between this investment and putting your money in a safe bank account that pa an EAR of 5% per year for any horizon, can you make the decision by simply comparing this EAR wit the IRR of the investment? Explain. a. What is the IRR of this investment? The IRR of this investment is %. (Round to two decimal places.)

answer the question now its econ answer it now!!!

You want to invest $25,000 and are looking for safe investment options. Your bank is offering you a certificate of deposit that pays a nominal rate of 4% that is compounded bimonthly (every two months). What is the effective rate of return that you will earn from this investment? 4.067%   4.188%   3.926%   4.152%     Suppose you decide to deposit $25,000 in a savings account that pays a nominal rate of 4%, but interest is compounded daily. Based on a 365-day year, how much would you have in the account after six months? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365.) $25,505.01   $26,015.11   $26,397.69   $24,739.86

(Solving for i​) You are considering investing in a security that will pay you ​$5,000 in 31 years.  a. If the appropriate discount rate is 11 percent,​ what is the present value of this investment? ​(Round to the nearest​ cent.) b. Assume these investments sell for ​$1,680 in return for which you receive ​$5,000 in 31 years. What is the rate of return investors earn on this investment if they buy it for ​$1,680​?

You are considering investing in a security that will pay you $3,000 in 30 years. a. If the appropriate discount rate is 10 percent, what is the present value of this investment? b. Assume these investments sell for $706 in return for which you receive $3,000 in 30 years. What is the rate of return investors earn on this investment if they buy it for $706 ?

How many times have you heard of an investment advisor who promises to double your money? Is this really an amazing feat? That depends on how long it will take for your money to double. With enough patience, your funds eventually will double even if they earn only a very modest interest rate. Suppose your advisor promises to double your money in eight years? What interest rate is implicitly being promised?  The advisor is promising a future value of $2 for every $1 invested today. Therefore, we find the interest rate by solving for r as follows:  Future value=PV×(1+r)t$2=$1×(1+r)8(1+r)=21/8=1.0905=9.05%   By the way, there is a convenient rule of thumb that one can use to approximate the answer to this problem. The Rule of 72 states that the time it will take for an investment to double in value equals approximately 72/r, where r is expressed as a percentage. Therefore, if the doubling period is eight years, the rule implies an (approximate) interest rate of 9 percent (since…

< A friend asks to borrow $51 from you and in return will pay you $54 in one year. If your bank is offering a 6.2% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $51 instead? b. How much money could you borrow today if you pay the bank $54 in one year? c. Should you loan the money to your friend or deposit it in the bank?

You want to go to Europe 5 years from now, and you can save $3,800 per year, beginning one year from today. You plan to deposit the funds in a mutual fund that you think will return 8.5% per year. Under these conditions, how much would you have just after you make the 5th deposit, 5 years from now? O a. $22,741.58 O b. $27,244.86 O c. $19,364.12 O d. $19,814.45 O e. $22,516.42

4. Present value Finding a present value is the reverse of finding a future value.       is the process of calculating the present value of a cash flow or a series of cash flows to be received in the future.   Which of the following investments that pay will $19,000 in 14 years will have a higher price today? The security that earns an interest rate of 7.00%.   The security that earns an interest rate of 10.50%.     Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 9.60%. Assuming that both investments have equal risk and Eric’s investment time horizon is flexible, which of the following investment options will exhibit the lower price? An investment that matures in five years   An investment that matures in six years     Which of the following is true about present value calculations? Other things remaining equal, the present value of a…

You are offered an investment that will pay you GH¢ 200 in one year, GH¢ 400 the next year, GH¢ 600 the next year and GH¢ 800 at the end of the next year. You can earn 12 percent on very similar investments. What is the most you should pay for this one?  A. Ghc 508.41 B. GHC 1,432.93 C. Ghc 2,000 D. Ghc 1,300

Which do you prefer: a bank account that pays 10% per year (EAR) for 3 years or a. An account that pays 5.0% every 6 months for 3 years? b. An account that pays 15.0% every 18 months for 3 years? c. An account that pays 1.0% per month for 3 years? a. An account that pays 5.0% every 6 months for 3 years? If you deposit $1 into a bank account that pays 10% per year for 3 years, the amount you will receive after 3 years is $ If you deposit $1 into a bank account that pays 5.0% every 6 months for 3 years, the amount you will receive after 3 years is $ (Select from the drop-down menu.) (Round to five decimal places.) Therefore, you will prefer b. An account that pays 15.0% every 18 months for 3 years? If you deposit $1 into a bank account that pays 15.0% every 18 months for 3 years, the amount you will receive after 3 years is $ Therefore, you will prefer (Select from the drop-down menu.) c. An account that pays 1.0% per month for 3 years? If you deposit $1 into a bank account that pays…

Please advise on these time value of money practice problems.  How would you solve these using a financial calculator?   What values would you enter for N, I/YR, PV, PMT, and FV ? a) Calculate the PV when you plan to receive $5,000 in 5 years with a 10% discount rate. b) Calculate the FV of a $10,000 deposit today for 10 years @ 5%. c) What is the PV of receiving $2,500 for each of the next 5 years with a 10% discount rate?

Suppose you have $10,000 and  a choice of two alternatives: A) put the money in a savings account that pays 4% per year, and B) buy a stock that has a 50% chance to gain 15% in value after 1 year, and a 50% chance to lose 5%. What will be the expected return for either alternative, and which one would you choose? Why?

You are currently investing your money in a bank account which has a nominal annual rate of 7 percent, compounded monthly.  How many years will it take for you to double your money? m Nper (or N) =n*m Rate (or I/Y)=i/m PV PMT FV   Must identify variables and use excel