1. The following are exercises in future (terminal) values: a. At the end of three years, how much is an initial deposit of $100 worth, assuming a compound annual interest rate of (i) 100 percent? (ii) 10 percent? (iii) 0 percent? b. At the end of five years, how much is an initial $500 deposit followed by five year-end, annual $100 payments worth, assuming a compound annual interest rate of (i) 10 per- cent? (ii) 5 percent? (iii) 0 percent? 65 c. At the end of six years, how much is an initial $500 deposit followed by five year-end, annual $100 payments worth, assuming a compound annual interest rate of (i) 10 per- cent? (ii) 5 percent? (iii) 0 percent?
1. The following are exercises in future (terminal) values: a. At the end of three years, how much is an initial deposit of $100 worth, assuming a compound annual interest rate of (i) 100 percent? (ii) 10 percent? (iii) 0 percent? b. At the end of five years, how much is an initial $500 deposit followed by five year-end, annual $100 payments worth, assuming a compound annual interest rate of (i) 10 per- cent? (ii) 5 percent? (iii) 0 percent? 65 c. At the end of six years, how much is an initial $500 deposit followed by five year-end, annual $100 payments worth, assuming a compound annual interest rate of (i) 10 per- cent? (ii) 5 percent? (iii) 0 percent?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Kindly answer first 3 parts of Question 1, i will ask next 2 parts in another question.
Transcribed Image Text:1. The following are exercises in future (terminal) values:
a. At the end of three years, how much is an initial deposit of $100 worth, assuming a
compound annual interest rate of (i) 100 percent? (ii) 10 percent? (iii) 0 percent?
b. At the end of five years, how much is an initial $500 deposit followed by five year-end,
annual $100 payments worth, assuming a compound annual interest rate of (i) 10 per-
cent? (ii) 5 percent? (iii) 0 percent?
65
c. At the end of six years, how much is an initial $500 deposit followed by five year-end,
annual $100 payments worth, assuming a compound annual interest rate of (i) 10 per-
cent? (ii) 5 percent? (iii) 0 percent?
d. At the end of three years, how much is an initial $100 deposit worth, assuming a quar-
terly compounded annual interest rate of (i) 100 percent? (ii) 10 percent?
e. Why do your answers to Part (d) differ from those to Part (a)?
f. At the end of 10 years, how much is a $100 initial deposit worth, assuming an annual
interest rate of 10 percent compounded (i) annually? (ii) semiannually? (iii) quarterly?
(iv) continuously?
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