An investment costs $250 now, yields $100 in 1 year and $200 in 2 years. You can reinvest the year 1 cash flow at some interest rate R. Your ann. HPR is 10%. R=_%.
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- please solve step by stepUse the RSTUV method to obtain the solution. If P dollars are invested at r percent compounded annually, then at the end of 2 years, the amount will have grown to A = P(1 + r)2. At what rate of interest will $1000 grow to $1123.60 in 2 years? %When an initial amount of P dollars is invested at r% annual interest compounded n times per year, the value of the account (4) after years is given by the equation nt A=P(1 + =)** n Write an equation that represents the value in an account that starts out with an initial investment of $5000 and pays 10% interest compound monthly. Then use that equation to fill the table and use the table to graph the equation. Years (1) Value (4) 0 5 10 15 20 oo → KI
- Consider the following cash flows. The interest rate is 10%. What is the duration (hint: you need PV)? Year 0 1 2 3 4 Cash flow 100 200 300 400You make an investment into a money market account at time T=0. In year T=5, the value of the money market account will be $5,000. The money market account pays an annual interest of R=6%, and interest is compounded on a quarterly basis. What is the present value of this account?You wish to have an investment that will bring about $50 000 in tenyears, and the rate of return is 8% per annum. Required:a. In term of time value of money, what is the amount of $50,000 represent?b. How much do you need to invest now if the rate is compounded annually(to the nearest dollar)?c. If you have $50,000 now and put the sum into a bank account that pays5% per year. How much will you have in 8 years if the rate is compounded semiannually, quarterly, monthly and daily (to the nearest dollar)?
- 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? Identify the following variables to help solve problem: m Nper (or N) =n*m Rate (or I/Y)=i/m PV PMT FVWhat is the Present Value of receiving $100,000 in 20 years if interest rates are 5%? Reference the following formulas to solve the problem: PV = FV (1+r)^t FV= PV / (1+r)^t -1)/r PVA PMT(((1-(1+r)^-t) /r)) F FVA= PMT(((1+r)^t)If you want to save $50,000 in 8 years, you will earn 6.5% on your investment. a. How much will your payments be annually? b. Identify N, PV, FV, PMT, and I/R, and the formula used to calculate the payment.
- An investment pays $40 annually, forever, starting 8 years from now (at t=8). The effective annual rate of interest is 4.6%. Find the PV of this investment at time 0.You invest in a project is expected to generate fixed annual cashflows for 4 years beginning in 3 years from today. If the discount rate is 2.5% and the project has a price of $6k today, then what are the fixed annual cashflows? (Round to the nearest cent).Consider a future value of $3,000, 5 years in the future. Assume that the nominal interest rate is 9.00%. If you are calculating the present value of this cash flow under semiannual (twice per year) compounding, you would enter for N and for I/Y into your financial calculator. Entering in the values you just calculated for N and I/Y, along with a PMT=0 and a FV=$3,000, into a financial calculator yields a present value of approximately $ with semiannual compounding. If you are calculating the present value of this cash flow under quarterly (four times per year) compounding, you would enter for N and for I/Y into your financial calculator. Entering in the values you just calculated for N and I/Y, along with a PMT=0 and a FV=$3,000, into a financial calculator yields a present value of approximately $ with quarterly compounding. Suppose now that the cash flow of $3,000 only 1 year in the future. If you are calculating the present value of this cash flow under quarterly (12 times per…