Consider the following alternatives: i. $100 received in one year ii. $220 received in 5 years iii. $330 received in 10 years a. Rank the alternatives from most valuable to least valuable if the interest rate is 7% per year. b. What is your ranking if the interest rate is only 6% per year? c. What is your ranking if the interest rate is 19% per year? a. Rank the alternatives from most valuable to least valuable if the interest rate is 7% per year. First, calculate the present value (PV) of each alternative: The PV of $100 received in one year if the interest rate is 7% per year is $ (Round to the nearest cent.)

Consider the following alternatives: i. $100 received in one year ii. $220 received in 5 years iii. $330 received in 10 years a. Rank the alternatives from most valuable to least valuable if the interest rate is 7% per year. b. What is your ranking if the interest rate is only 6% per year? c. What is your ranking if the interest rate is 19% per year? a. Rank the alternatives from most valuable to least valuable if the interest rate is 7% per year. First, calculate the present value (PV) of each alternative: The PV of $100 received in one year if the interest rate is 7% per year is $ (Round to the nearest cent.)

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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Suppose that a 10-year T-note is purchased with a face value of $20,000 and a coupon rate of 3.4% (a) What is the total return of this investment? (b) What is the average rate of retum? (a) The total return is $ (Simplity your answer.) (b) The average rate of return is%. (Simplify your answer. Round to two decimal places as needed.)
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 ______.
Which of the following statements is CORRECT? Question 2 options: a) The proportion of the payment that goes toward interest on a fully amortized loan increases over time. b) An investment that has a nomiral rate of 6% with semiannual payments will have an effective rate that is smaller than 6%. c) If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different. d) The present value of a 3-year, $150 ordinary annuity will exceed the present value of a 3-year, $150 annuity due. e) if a loan has a nominal annual rate of 7%, then the effective rate will never be less than 7%.
Find the present worth sum of money that would be equivalent to the future amounts of $5000 in year 6 and $7000 in year 8 if the real interest rate is 10% per year and the inflation rate is 5% per year. Solve using the factors and their equations with (a) an inflation-adjusted rate, and (b) the real interest rate. Solve manually please
3. If you receive $98 each month for 12 months and the discount rate is 0.07, what is the present value? (show the process and can use financial calculator)
You deposit $2X today, $3X one year from now and $3X two years from now. If there are different annual compounding interest rates per period as shown in the diagram below and if you had $19803 at the end of year 3, what is the value of X?
Determine the present value P you must invest to have the future value A at simple interest rate r after time t. A = $19,000, r = 11.5%, t = 4 years The present value that must be invested to get $19,000 after 4 years at an interest rate of 11.5% is $. (Round up to the nearest cent.)
1. What is the different between an ordinary annuity and an annuity due? Which occursmore in practice? Give a common example of both. 2. Using the example of a savings account, explain the difference between the effectiveannual rate and the annual percentage rate. 3. A mortgage instrument pays $1.5 million at the end of each of the next two years. Aninvestor has an alternative investment with the same amount of risk that will payinterest at 8% compounded semiannually. what the investor should pay for themortgage instrument?
You are running a hot Internet company. Analysts predict that its earnings will grow at 10% per year for the next 7 years. After that, as competition increases, earnings growth is expected to slow to 6% per year and continue at that level forever. Your company has just announced earnings of $4 million. What is the present value of all future earnings if the interest rate is 9 % ? (Assume all cash flows occur at the end of the year.)
9 Suppose you invested $500 in a local credit union and: f(t) gives the future value of the investment in t years, if the APR is 2% and interest is compounded quarterly. • g(t) gives the future value of the investment in t years, if the APR is 2% and interest is compounded monthly. h(t) gives the future value of the investment in f years, if the APR is 2% and interest is compounded continuously. a. Write a function rule for f(t). For g(t). For h(t). Then describe how the rules are similar and how they are different. b. Based on your understanding of exponential growth, describe how the graphs of f(t), g(t), and h(t) are similar, and how they are different. c. On the same coordinate grid, use algebraic reasoning to sketch graphs of the three functions. .
Investment X offers to pay you $4,700 per year for 9 years, whereas Investment Y offers to pay you $6,400 per year for 5 years. a. If the discount rate is 8 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. If the discount rate is 20 percent, what is the present value of these cash flows?
(Use Calculator or Formula Approach) Suppose you have $500 to invest and you believe that you can earn 8% per year over the next 15 years. How much would you have at the end of 15 years using compound interest?

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