Please correct answer and don't use hand rating Dimitri is willing to invest $45,000 for eight years, and is an economically rational investor. He has identified three investment alternatives (A, B, andC) that vary in their method of calculating interest and in the annual interest rate offered. Since he can only make one investment during the eightyear investment period, complete the following table and indicate whether Dimitri should invest in each of the investments.Note: When calculating each investment's future value, assume that all interest is earned annually. The final value should be rounded to the nearestwhole dollar.InvestmentInterest Rate and MethodExpected Future Value Make this investment?AB10% simple interest6% compound interest$C7% compound interest

Investment A: Simple InterestFormula: Future Value = Principal + (Principal * Interest Rate *…

Answered: Dimitri is willing to invest $45,000…

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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An investor is considering an investment that will pay $2,170 at the end of each year for the next 10 years. He expects to earn a return of 12 percent on his investment, compounded annually. Required: a. How much should he pay today for the investment? b. How much should he pay if the investment returns are received at the beginning of each year? (For all requirements, do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) a. Present value of ordinary annuity b. Present value of annuity due
Zachary has purchased an investment that he expects to produce income of $3,000 at the end of the first year and $4,000 at the end of the second year. If he pays $5,800 for this investment, what is the internal rate of return?
Oprah is deciding between investment options. Both investments earn an interest rate of 7%, but interest on the first investment is compounded annually, while interest on the second investment is compounded semiannually. Which investment would you advise Oprah to choose? Why?
John has an investment opportunity that promises to pay him $16,000 in four years. Suppose the opportunity requires John to invest $13,200 today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What is the interest rate John would earn on this investment? (Round your interest rate to the nearest whole percentage.) Solve for i Present Value: n = i = Future Value:
Walt is evaluating an investment that will provide the following returns at the end of each of the following years: year I, $12,500; year 2, $10,000; year 3, $7,500; year 4,$5,000; year 5, $2,500; year 6, SO; and year 7, $12,500. Walt believes that he should earn 12 percent compounded annu- ally on this investment. How much should he pay for this investment? What if he expects to earn an annual return of 9 percent compounded monthly? How much should he pay? excel formula.
Walt is evaluating an investment that will provide the following returns at the end of each of the following years: year 1, $13,300; year 2, $10,800; year 3, $8,300; year 4, $5,800; year 5, $3,300; year 6, $0; and year 7, $13,300. How much should he pay if he expects to earn an annual return of 9 percent compounded monthly?
Katrina is planning to make an additional investment at the end of each year for his retirement in 20 years. Katrina plans to invest $5,000 each year for the first 5 years, $8,000 each year for the next 5 years, and $ 12,000 each year for the remaining 10 years. If the rate of return of 11 percent can be earned in these investments, how much money will Katrina have at the end of 20 years? (Answer must have step by step explainations.)
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.
Walt is evaluating an investment that will provide the following returns at the end of each of the following years: year l, $12,500; year 2, $10,000; year 3, $7,500; year 4, $5,000; year 5, $2,500; year 6, $0; and year 7, $12,500. Walt believes that he should earn 12 percent compounded annually on this investment. How much should he pay for this investment? What if he expects to earn an annual return of 9 percent compounded monthly? How much should he pay?
Fatema wants to choose a better option for making an investment, help him to decide which is the better option by calculating the time value of money for the following: ich pays 6.75% interest for 15 years. a) An investment of OMR. 40000 in a Bond b) A Bank deposit of OMR 40000 which pays 6.75% interest for 15 years but compounding is done quarterly. c) Which of the two options should Abdullah accept? Why
Mr. Abdullah is planning to invest $ 100,000 and looking for a good investment opportunity. that will maximize the return with minimum time. Following options are available for him. Calculate and analysis the return from each investment option and advise him by considering the Rate of return and time value of money. Option 1 Deposit $100,000 in an account earning 12% simple interest for 6 years Option 2 Deposit $100,000 in an account earning 7% compound interest for 4 years Option 3 Deposit $100,000 in an account earning 14% simple interest for 3 years Option 4 Deposit $100,000 in an account earning 5% compound interest for 6 years
Maryam's retirement scheme is in such a way that for the present year, she invests QR 250,000 (as Present Cash outflow) and she expects of the asset of QR 700,000 (Cash inflow) over 20 years. Assuming no deposits (A) made to his retirement account over the aforementioned 20 year period, what annual rate of return did she make? Hint: You may use RATE function in MS Excel to calculate the annual rate of return. 8.00% 4.22% 3.13% 5.28%

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