Ashraf wants to buy a car for which he has been saving and investing in a bank an amount of OMR. 1000 each year for 10O years. He is willing to withdraw and buy a unew car today. What amount will he receive assuming an interest rate of Option a : 7% Option b: 9%?

Ashraf wants to buy a car for which he has been saving and investing in a bank an amount of OMR. 1000 each year for 10O years. He is willing to withdraw and buy a unew car today. What amount will he receive assuming an interest rate of Option a : 7% Option b: 9%?

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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2. Alexander borrows P50,000 from Caden. Caden offers him two options for the interest: a. Ordinary interest with a rate of 3% for 600 days b. Exact interest with a rate of 3% for 684 days If Alexander will ask you now as his financial advisor, what option should he choose? Why?
You are required to two choose from two actions: A1: deposit K1 000 000 in the bank for 1 year at 7 % interest A2: invest K 1 000 000 for 1 year with 50% probability of having K2 500 000 at the end of the year, and 50% probability of losing all the K 1 000 000. Which would you choose and why?
If you deposit OMR 19500 in your account in a bank; suppose the bank pays 16.15% compound interest monthly. Calculate future value of your money in 5 years. Select one: a. 49376.99 b. None of the option c. 216319.80 d. 219545.18 e. 219554.81
Prudential Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs K200, 000 per year forever. If the required return on this investment is 6.5 percent, how much will you pay for the policy? Suppose the Prudential Life Insurance Co. counter offers and told you that the policy costs K340,000. At what interest rate would this be a fair deal?
Your rich uncle dies, leaving you a life insurance policy worth $12 0,000. The insurance company also offers you an option to receive $8,225 per year for 25 years, with the first payment due today. You should choose the immediate payout if the interest rate is greater than a. 5.27% b. 5. 76% c. 7.75% d. 4.66%
If you deposit OMR 19500 in your account in a bank; suppose the bank pays 16.25% compound interest monthly. Calculate future value of your money in 15 years. Select one: a. 49673.99 b. 219545.18 c. 219554.81 d. 1731.98 e. None of the option
Dixie Bank offers a certificate of deposit with an option to select your own investment period. Jonathan has $8,000 for his CD investment. If the bank is offering a 5.5% interest rate, compounded annually, how much will the CD be worth at maturity if Jonathan picks a a. three-year investment period? b. six-year investment period? c. eight-year investment period? d. twenty-year investment period? a. How much will the $8,000 CD investment at 5.5% interest rate be worth at maturity if Jonathan picks a 3-year investment period? $nothing (Round to the nearest cent.)
A life insurance co. is trying to sell you an investment policy that will pay you and your heirs $15,199 per year forever. If the policy costs $428,853 today, at what interest rate (in percent) is it properly priced? Answer to two decimals.
Y Nicole borrows $221000 for 10 years at a nominal rate of 6.1% convertible montly. She has the option of paying off the loan using ether amortuation or the sinking fund mothod. (a) If she chooses to amortize the loan with level monthly payments of 80, what is the amount of oach of her monthly paymerts? Q =s (b) If the sinking fund has an interest rate of 6.3% convertible monthly, what is the amount of her monthly outlay if she chooses this method? (Assume morithy payments and deposits.) Outlay S (c) How much will she save each month by going with the better method? dollars. Answer
The bank offers you the following three options to pay back the loan from the previous question: I: To pay the interest of 6.00% annually II: To pay an interest of 0.49% monthly III: To pay an interest of 1.46% quarterly Which of these three options would be most beneficial for you? O All three options would be equally beneficial Option II ○ Option III Option I O Option II and Option III would be equally beneficial
Jacob wishes to borrow $80,000 from his bank, J.P. Morgan, in order to expand his business. J. P. Morgan agrees to lend him the money over a 5-year term at an APR of 8% and will accept either annual, quarterly, or monthly payments with no change in the quoted APR. Calculate the periodic payment under each alternative and compare the total amount paid each year under each option. Which period should Jacob choose and why? Show your calculations using a formula.
Bill plans to buy a new house soon he’s considering two mortgage options. 15 year mortgage with a APR 2.75% or a 30 year mortgage with an APR of 3.14%. Both options are compound interest monthly. Bill currently spends $1,685 each month on rent he will like to spend the same on a mortgage. He doesn’t have a down payment and will finance the full price for the home. Round answer to whole numbers a. If Bill choose the 15 year mortgage how much doesn’t he need to borrow b. If Bill choose the 30 year mortgage how much doesn’t he need to borrow c. Which option will allow Bill go borrow the most. By how much d. Which option will Bill spend the most overall. By how much

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