14. Alicia owns two investments, A and B, that have a combined total value of $31,300. Investment A is expected to pay $24,800 in 4 years from today and has an expected return of 12.72 percent per year. Investment B is expected to pay $27,100 in T years from today and has an expected return of 8.19 percent per year. What is T, the number of years from today that investment B is expected to pay $27,100?
14. Alicia owns two investments, A and B, that have a combined total value of $31,300. Investment A is expected to pay $24,800 in 4 years from today and has an expected return of 12.72 percent per year. Investment B is expected to pay $27,100 in T years from today and has an expected return of 8.19 percent per year. What is T, the number of years from today that investment B is expected to pay $27,100?
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
Related questions
Question
Transcribed Image Text:14. Alicia owns two investments, A and B, that have a combined
total value of $31,300. Investment A is expected to pay $24,800 in
4 years from today and has an expected return of 12.72 percent per
year. Investment B is expected to pay $27,100 in T years from
today and has an expected return of 8.19 percent per year. What is
T, the number of years from today that investment B is expected to
pay $27,100?
(Fall 2011, test 1, question 3)
(Spring 2012, final, question 1)
(Spring 2016, final, question 1)
(Fall 2017, test 1, question 3)
(Spring 2018, final, question 1)
Expert Solution
Step 1
Calculate the amount of investment A (P A) by equating the total amount which is $24,800 with the sum of principal (P A) and simple interest formula. Here 'P A' represents the principal amount invested in Investment A, 'R' represents the interest rate which is 12.72% and 'T' represents the time of investment A which is 4 years.
Thus, the amount of investment A is $16,436.90.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education