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7.1. How many years will it take for an investment to double in value, if it earns interest at a rate of 8.5 p.a., compounded quarterly?

7.1. How many years will it take for an investment to double in value, if it earns interest at a rate of 8.5 p.a., compounded quarterly?

Essentials Of Investments
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
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7.1. How many years will it take for an investment to double in value, if it earns interest at a rate of 8.5 p.a., compounded quarterly? 7.2. A company purchased machinery for R500 000. After 5 years, the machinery was sold for R180 000 and new machinery was bought. 7.2.1. Calculate the rate depreciation of the old machinery over 5 years using the reducing-balance method. 7.2.2. The rate of inflation for the cost of the new machinery is 6.3% p.a./over the 5 years. What will the new machinery cost at the end of 5 years? 7.2.3. The company set up a sinking fund and made the first payment into this fund on the day the old machinery was bought. The last payment was made three months before the new machinery was purchased at the end of 5 years. The interest earned on the sinking fund was 10.25% p.a. compounded monthly, the money from the sinking fund and the R180 000 from the sale of the old machinery was used to pay for the new machinery. Calculate the monthly payment into the sinking fund.
Transcribed Image Text:7.1. How many years will it take for an investment to double in value, if it earns interest at a rate of 8.5 p.a., compounded quarterly? 7.2. A company purchased machinery for R500 000. After 5 years, the machinery was sold for R180 000 and new machinery was bought. 7.2.1. Calculate the rate depreciation of the old machinery over 5 years using the reducing-balance method. 7.2.2. The rate of inflation for the cost of the new machinery is 6.3% p.a./over the 5 years. What will the new machinery cost at the end of 5 years? 7.2.3. The company set up a sinking fund and made the first payment into this fund on the day the old machinery was bought. The last payment was made three months before the new machinery was purchased at the end of 5 years. The interest earned on the sinking fund was 10.25% p.a. compounded monthly, the money from the sinking fund and the R180 000 from the sale of the old machinery was used to pay for the new machinery. Calculate the monthly payment into the sinking fund.
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