Consider an investment which pays 1.05 times your original payment (which is not returned) after two months. Find the annualised rate of return of this investment. Your answer should be a percentage, but do not enter the % sign. For example, it your answer is 75, enter 75. Answer:
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- Assume that at the beginning of the year, you purchase an investment for $6,300 that pays $130 annual income. Also assume the investment's value has increased to $6,900 by the end of the year. a. What is the rate of return for this investment? Note: Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places. Rate of return % b. Is the rate of return a positive or a negative number? Positive NegativeWhat 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.Assume that at the beginning of the year, you purchase an investment for $7,200 that pays $100 annual income. Also assume the investment's value has decreased to $6,800 by the end of the year. (a) What is the rate of return for this investment? (Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places.) Rate of return % (b) Is the rate of return a positive or negative number? Positive O Negative
- You are considering an investment with the following characteristics. The investment will cost you $551 today, but will pay you annual benefits of $107 for 11 years starting at the end of the first year. The relevant opportunity cost of capital is 9%. What is the NPV of this investment? Round your answer to two decimals. Enter negative values with a - sign. Don't enter the $-symbol as part of your answer.Find 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 = ?Calculate the geometric (average) return over the 5-year investment period. Year Price 0 19 1 22 2 20 3 23 4 25 5 27 Round your answer to 4 decimal places. For example, if your answer is 3.205%, then please write down 0.0321.
- You 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 comparing two annuities. Annuity A pays $110 at the end of each year for 5 years. Annuity B pays $100 at the beginning of each year for 5 years. The rate of return on both annuities is 8 percent. Which one of the following statements is correct given this information? O Annuity B has both a higher present value and a higher future value than Annuity A. Annuity A has both a higher present value and a higher future value than Annuity B. O Annuity A has the same present value and future value as Annuity B.In your own words, explain how compounding works. According to the rule of 72, if you deposit $100 in an account that pays 9% compound interest, how long will it take that initial deposit to reach $200? Use the matrix given below. For each type of investment, record this information: • Is the risk high, moderate, or low? • Is the return high, moderate, or low? • How does this type of investment work? Explain in one or two sentences.
- If a particular investment will pay $500, 5 months from now, and an additional $500, 9 months from now, what is the largest amount that an investor should be willing to invest today, assuming money earns a rate of return of 7%? Assume that the investment has no money left after the two withdrawals.1. If you receive $176 each month for 12 months and the discount rate is 0.04, what is the future value? (show the process and can use financial calculator)Suppose that you can make an annual profit of $600 on an investment of $4000. Suppose you borrow the investment amount at an annual interest rate of 8%. Your updated expectation of inflation is 6%. Then your gross real returns (before loan payment) is _____ and your net real returns (after loan payment) is ______.