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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- Use 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 → KIFind the PV and FV of an investment that makes the following end-of-year payments. The interest rate is 8%. Year Payment 1 100 2 200 3 400 Rate = 8% To find the PV, use the NPV function: PV = Year Payment x (1 + I )^(N-t) = FV1 100 1.17 116.64 2 200 1.08 216.00 3 400 1.00 400.00 Sum = ?PV = ?FV of PV = ?
- Determine the present value P you must invest to have the future value A at simple interest rate r after time t. A = $19,000, r = 11.5%, t = 4 years The present value that must be invested to get $19,000 after 4 years at an interest rate of 11.5% is $. (Round up to the nearest cent.)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 400What is the present value of an investment that pays $190 at the end of year 1, $107 at the year of year 2, and $235 at the end of year 3 if this investment earns 5% annually? your answer should be to the nearest dollar. For example, if your answer is id=mce_marker50, then input as 150.
- You 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?Find the present value PV of the annuity account necessary to fund the withdrawal given. HINT [See Quick Example 3.] (Assume end-of-period withdrawals and compounding at the same intervals as withdrawals. Round your answer to the nearest cent.) $2,800 per quarter for 10 years, if the account earns 6% per year PV = $ Need Help? Read ItYou have OMR800 that you would like to invest. You have 2 choices: Savings account A which earns 8% compounded annually or savings account B which earns 7.70% compounded monthly. Which would you choose and why? Select one: O a. A because the future value in one year is lower. O b. A because it has a higher effective annual rate. O c. B because it has a higher effective annual rate. O d. A because it has the higher quoted rate. O e. B because the future value in one year is lower.
- 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 FVInvest $600; Annual interest rate 1.8%; Compounded weekly; Want $1,000. Find years needed. Variable Value N = I% = PV = PMT= FV = P/Y = C/Y = What is the Missing Variable Unit? Write a Context SentenceMark plans to invest $9,200 into a savings account with a 6% annual interest rate compounded semi-annually. If Mark wants $18,000 in the account, how many years does Mark need to invest? Variable Value N = I% = PV = PMT= FV = P/Y = C/Y = What is the Missing Variable Unit? Write a Context Sentence: