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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Question
Transcribed Image Text:c. Find the PV of $1,000 due in 6 years if the discount rate is 12%. Round your answer to the nearest cent.
2$
d. A security has a cost of $1,000 and will return $2,000 after 6 years. What rate of return does the security provide? Round your answer to two decimal places.
%
e. Suppose California's population is 34.3 million people, and its population is expected to grow by 3% annually. How long will it take for the population to double? Round your ans
to the nearest whole number.
years
f. Find the PV of an ordinary annuity that pays $1,000 each of the next 6 years if the interest rate is 18%. Then find the FV of that same annuity. Round your answers to the nearest
cent
PV of ordinary annuity: $
FV of ordinary annuity: $
g. How will the PV and FV of the annuity in part f change if it is an annuity due rather than an ordinary annuity? Round your answers to the nearest cent.
PV of annuity due: $
FV of annuity due: $
h. What will the FV and the PV for parts a and c be if the interest rate is 12% with semiannual compounding rather than 12% with annual compounding? Round your answers to the
nearest cent.
FV with semiannual compounding: $
PV with semiannual compounding: $
i. Find the annual payments for an ordinary annuity and an annuity due for 12 years with a PV of $1,000 and an interest rate of 10%. Round your answers to the nearest cent.
Annual payment for ordinary annuity: $
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C. Find the PV of $1,000 due in 6 years if the discount rate is 12%. Round your answer to the nearest cent.
d. A security has a cost of $1,000 and will return $2,000 after 6 years. What rate of return does the security provide? Round your answer to two decimal places.
%
e. Suppose California's population is 34.3 million people, and its population is expected to grow by 3% annually. How long will it take for the population to double? Round y
to the nearest whole number.
years
f. Find the PV of an ordinary annuity that pays $1,000 each of the next 6 years if the interest rate is 18%. Then find the FV of that same annuity. Round your answers to the
cent.
PV of ordinary annuity: $
FV of ordinary annuity: $
g. How will the PV and FV of the annuity in part f change if it is an annuity due rather than an ordinary annuity? Round your answers to the nearest cent.
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