Photo from MR. A b) How might they be mathematically related whenapplied to interest - type investments where yourmoney is invested at the beginning of the year? FV == Present ValuePV × (1 + i) n where; Future Value (FV)(PV) + the accumulated and compounded Interest, "i"is the interest rate and n is the number of years ofinvestment. (c) How might they be mathematicallyrelated when applied to mining - type investmentswhere your investment consists of amounts spentthroughout the year and you only receive money backfrom the mine's eventual product sales? Provide someexplanation for the difference

b) Interest-Type Investments: In the case of interest-type investments, you're often dealing with a…

Answered: b) How might they be mathematically…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 13MC: Which of the following discounts future cash flows to their present value at the expected rate of...

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Similar questions

Which of the following is not needed to compute the present value of an investment?a. The length of time between the investment and future receiptb. The interest ratec. The rate of inflationd. The amount of the receipT
A. Assume that the variables I, N, and PV represent the interest rate, investment or deposit period, and present value of the amount deposited or invested, respectively. Which equation best represents the calculation of a future value (FV) using: Compound interest? FV = (1 + I)NN / PV FV = PV / (1 + I)NN FV = PV x (1 + I)NN B. Simple interest? FV = PV + (PV x I x N) FV = PV - (PV x I x N) FV = PV / (PV x I x N) C. Identify whether the following statements about the simple and compound interest methods are true or false. Statement True False After the end of the second year and all other factors remaining equal, a future value based on compound interest will never exceed the future value based on simple interest. All other variables held constant, investments paying simple interest have to pay significantly higher interest rates to earn the same amount of interest as an account earning compound…
Both simple and compound interest represent the rate of return (ROR) on investments Select one: True False
The value of a sum after investing over one or more periods is calleda) Discount Valueb) Nonec) Compound and future valued) Present value
Assume that the variables I, N, and PV represent the interest rate, investment or deposit period, and present value of the amount deposited or invested, respectively. Which equation best represents the calculation of a future value (FV) using: Compound interest? O FV = PV / (1+1)N O FV = PV + (PV XIX N) O FV = PV x (1 + I)N Simple interest? OFV = PV + (PV XIX N) O FV = PV XIX N O FV = PV/(PV XIX N)
(b) Explain the relationship between net present value and internal rate of return, and show how they may offer complementary methods for evaluating investments.
Why are rates of return superior to dollar returns when comparingdifferent potential investments?
Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the Initial Investment? A. internal rate of return (IRR) method B. net present value (N PV) C. discounted cash flow model D. future value method
Would you expect positive covariances of returns between different types of assets such as returns on Treasury bills, General Electric common stock, and commercial real estate? Why or why not?
Describe the Procedures used to determine the rate of return internal to nonsimple investments?
2. How would you describe the correlation between risk and return in investments, and what are the various types of income that investors consider from their standpoint?
The actual interest paid or earned is commonly referred to as the: a. Risk premium. b. Annual effective interest rate. c. Nominal interest rate. d. Real rate of return.

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