Anu wants to put aside an amount at the beginning of each month while working for the next 5 years (60 months). At the end of 60 months, she wants to start a business and she plans to have a budget for it of at least $50,000. How much should she put aside each month if interest payable on her savings is 0.125% per month? [Hint: think about a Geometric Sequence (GP).] (Give your answer to 2 decimal places.)
Anu wants to put aside an amount at the beginning of each month while working for the next 5 years (60 months). At the end of 60 months, she wants to start a business and she plans to have a budget for it of at least $50,000. How much should she put aside each month if interest payable on her savings is 0.125% per month? [Hint: think about a Geometric Sequence (GP).] (Give your answer to 2 decimal places.)
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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a) Anu wants to put aside an amount at the beginning of each month while working for the next 5 years (60 months). At the end of 60 months, she wants to start a business and she plans to have a budget for it of at least $50,000. How much should she put aside each month if interest payable on her savings is 0.125% per month? [Hint: think about a Geometric Sequence (GP).] (Give your answer to 2 decimal places.)
b) Suppose that the sum of $100 is invested at an annual rate of interest of 10%. Calculate the value of the investment in 5 years’ time if the interest is compounded (i) weekly and (ii) semi-annually
Show all your calculations. (Give your answer to 2 decimal places.)
Transcribed Image Text:a) Consider the utility function of Carin
where:
(i)
U (9₁, 92) = 3 × 91/²
1/3
91 = total units of product 1 that Carin consumes
q2 = total units of product 2 that Carin consumes
U = total utility that Carin derives from her consumption of product 1 and 2
0)
x 92
Calculate the Carin's marginal utilities from product 1 and product 2.
au
au
(MUq₁ = and MUq₂ =
0q1
даг
Transcribed Image Text:(ii) Estimate the IRR of the Hair Salon project and decide whether this project would proceed?
Explain your answer and show all your calculations.
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