Duane purchased a painting for $9800 at the beginning of 2009. He received annual payments of $550 at the end of each year through 2014 by putting up the painting for show. At the end of 2014, he sells the painting for $10,000. Compute the yield (internal rate of return) Duane earned on his painting purchase.

Duane purchased a painting for $9800 at the beginning of 2009. He received annual payments of $550 at the end of each year through 2014 by putting up the painting for show. At the end of 2014, he sells the painting for $10,000. Compute the yield (internal rate of return) Duane earned on his painting purchase.

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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Lastly, Hector wants to invest in a certificate of deposit (CD) to purchase a boat that costs $28,500 when he retires. Leaf Investments offers a CD with 13% compounded semiannually. How much would Hector have to put in the CD today to gain $28,500 in 30 years?
Ted is an investor and has purchased an IIP for the original price of $984.31767830979. For your convenience, the original information regarding IIP's has been repeated below. Customers pay $984.31767830979 to buy an IIP. The IIP will pay out $37 at the end of each year for 12 years The IIP will pay out a further single payment of $1,000 after 12 years There are no further payments after this single payment at time 12. a. Suppose Ted holds on to the IIP for the full 12 years. Ignoring time value of money, what is the profit he receives on an IIP? (This can be regarded as profit for tax purposes).
Rob borrowed $5,800 from Richard and signed a contract agreeing to pay it back 10 months later with 4.55% simple interest. After 3 months, Richard sold the contract to Chris at a price that would earn Chris 5.00% simple interest per annum. Calculate the price that Chris paid Richard.
Elizabeth purchased an annuity in 2010. She paid $75,000 for the annuity. She is not going to receive a life annuity of $1,000 per month. Elizabeth is expected to live for 10 years. Which of the following is true? She will include $625 of each payment for the entire annuity payment. She will include $375 of each payment until the total basis has been excluded. She will exclude100% of each payment until the total basis has been excluded. She will include $250 of each payment until the total basis has been excluded.
Soo Young purchased a new home for $510,000. At the same time, he sold a home for $495,000 in which he had a net equity of $304,000 after paying off the existing mortgage of $191,000. He used $224,300 that equity as a down payment on the new home while borrowing the rest with a new mortgage. He used $50,000 of the net equityto buy a new SUV. The closing costs on the sale of his old home were $29,700 and were subtracted from the net equity. What is the immediate impact of this transaction on Soo Young's net worth? a. His net worth decreases by $29,700. b. His net worth decreases by $94,700. c. His net worth increases by $15,000. d. His net worth increases by $20,300. e. His net worth remains the same.
Larry purchased a new combine that cost $210,500, minus a rebate of $2,500, a trade-in of $6,500, and a down payment of $8,000. He takes out a loan for the balance at 8% APR over 4 years. Find the annual payment. (Simplify your answer completely. Round your answer to the nearest cent.)
In 1974, your father purchased a rare art item for $10,000. In 2010, you sold it for $5 million. What annual rate of return did you earn on your father’s purchase? A. 17.77% B. 16.81% C. 20.06% D. 21.43% E. 23.02% F. 18.84%
Done Present value interest factor of $1 per period at i% for n periods, PVIF(i,n). 5.5% 9.0% 9.5% 1 0.9754 0.9515 0.9057 0.9705 0.8880 0.9420 0.9145 0.9327 0.9010 0.9657 0.9609 0.9561 0.5847 0.3505 0.9513 0.8963 0.9466 0.9419 0.8874 0.5897 0.5568 0.8489 0.8364 0.9372 0.8787 0.8240 0.7254 0.6810 0.6394 0.8118 0.7579 0.7077 0.6611 0.6178 0.9326 0.8700 0.8613 0.5643 0.5303 0.5400 0.5051 0.5167 0.4810 0.9279 0.7999 0.6905 0.6419 0.5553 0.5969 0.8528 0.6736 0.7880 0.9233 0.5767 0.5339 0,4945 0.9187 0.8444 0.7764 0.6572 0.5572 0.4732 0.5134 0.4581 0.4363 0.4155 0.3957 0.8360 0.9141 0.7649 0.6412 0.5874 0.5384 0.4936 0.2120 0.4528 0.9096 0.8277 0.6255 0.7536 0.5703 0.5202 0.1945 0.4746 0.4333 0.9051 0.6730 0.6103 0.5537 0.5026 0.4564 0.4146 0.3769 0.1784 0.1628 0.5954 0.5375 0.1803 0.1637 0.1487 7.5% 10.0% 8.0 % 8.5% 6.5% 7.0% 4.5% 6.0% 5.0% 2.5% 3.0% 3.5% 4.0% 2.0% 1.5% 1.0% Period 0.5% 0.9390 0.9346 0.9302 0.9259 0.9217 0.9174 0.9132 0.9091 0.9950 0.9901 0.9852 0.9804 0.9756 0.9709 0.9662…
Jessica purchased a home on January 1, 2018 for $510,000 by making a down payment of $200,00 and financing the remaining $310,000 with a 30-year loan, secured by the residence, at 6 percent. During 2018 and 2019, Jessica made interest-only payments on this loan of $18,600 (each year). On July 1, 2018, when her home was worth $510,000 Jessica borrowed an additional $127,500 secured by the home at an interest rate of 8 percent. During 2018, she made interest-only payments on the second loan in the amount of $5,100. During 2019, she made interest only on the second loan in the amount of $10,200. What is the maximum amount of the $28,800 interest expense Jessica paid during 2019 may she deduct as an itemized deduction if she used the proceeds of the second loan to finish the basement in her home and landscape her yard? (Assume not married filing separately.) Multiple Choice ___ $0. ___ $10,200. ___ $27,106. ___ $6,600.
Amir started contributing $5500 to a TFSA at the end of every year beginning in 2013. In 2015, the maximum allowable annual contribution was increased to $10,000 and Amir planned to continue to contribute the maximum amount at the end of every year for the next 15 years. How much will he have in his TFSA it the maximum allowable annual contribution remains at $10,000 and his average rate of return is 8% compounded annually?
Bertha bought a new home entertainment system today from Andre's Electronics. She will receive a cash-rebate of $232.00 from Andre's Electronics today, pay $719.00 to Andre's Electronics in 1 year, receive a cash rebate of $1,638.00 from Andre's Electronics in 2 years, and pay $4,985.00 to Andre's Electronics in 4 years. If the discount rate is 18.38 percent, then what is the present value of the cash flows associated with this transaction? O $-1,744.87 (plus or minus 3 dollars) O $-2,211.42 (plus or minus 3 dollars) O $-530.14 (plus or minus 3 dollars) O $-1,200.61 (plus or minus 3 dollars) O none of the answers are within 3 dollars of the correct answer

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