For each growth rate below, (i) use the rule of 70 to calculate how long it will take incomes to double, and (ii) if each country starts with an income of $1,000 per capita, use the exponential growth equation to calculate what the income will be in 30 years. Instructions: Round your answers to one decimal place. Years for incomes to double Incomes in 30 years a. 4 percent b. 7 percent c. 2.5 percent d 10 percent e. 3 percent

For each growth rate below, (i) use the rule of 70 to calculate how long it will take incomes to double, and (ii) if each country starts with an income of $1,000 per capita, use the exponential growth equation to calculate what the income will be in 30 years. Instructions: Round your answers to one decimal place. Years for incomes to double Incomes in 30 years a. 4 percent b. 7 percent c. 2.5 percent d 10 percent e. 3 percent

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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(Solving for n with non-annual periods) Approximately how many years would it take for an investment to grow sixfold if it were invested at 17 percent compounded monthly? Assume that you invest $1 today. C If you invest $1 at 17 percent compounded monthly, about how many years would it take for your investment to grow sixfold to $6? (Hint: Remember to convert your calculator solution to years.) years (Round to one decimal place.)
The interest rate required for a $2,050 investment to double in 5 years can be found from this equation: 4,100=2,050(1+r2)104,100=2,0501+r210 . Find the necessary rate. Your answer should be a decimal, but express it as a percentage to 2 decimal places: The rate is %
Using the rule of 72, approximately how many years are needed to double a $100 investment when interest rates are 5.25 percent per year? (Round your answer to 2 decimal places.)
Present Value of Amounts Due Assume that you are going to receive $380,000 in 10 years. The current market rate of interest is 11%. a. Using the present value of $1 table in Exhibit 5, determine the present value of this amount compounded annually. Round to the nearest whole dollar. $ b. Why is the present value less than the $380,000 to be received in the future? The present value is less due to over the 10 years.
Suppose you invest $350 in a CD with an APR of 2.9% compounded daily. Match each expression with what it represents in this context. 0.029 . 100 365 0.029 1+ 365 365(11) 365 0.029 1+ 365 0.029 365 (11) 1+ 365 365 0.029 1+ 100 365 a. The 11-year growth factor b. The number of times interest is compounded in 11 years c. The daily growth factor d. The daily percent change e. None of these. f. The annual growth factor
Please show working Someone promises to pay you $1,000 in years 5, 10 and 15 for a total of $3,000. Assume your required return is 8%. a. what is the duration of this promise to pay you $3,000 over 15 years? b. what's the convexity? c. using the duration estimate alone, what is the estimated percentage price change in t=0 value if rates are expected to increase 2%?
Suppose you have $1,000,000 today and starting a year from now you intend to spend this money over the next 30 years. Assume the nominal rate of interest is 9.2%, inflation rate of 5% and the real rate of interest is 4%. How much can you spend annually in real dollar terms over the next 20 years to ensure constant spending in real terms? A. $40,000.00 B. $57,830.10 C. $64,011.96 D. $73,581.75
Using the rule of 72, approximately how many years are needed to double a $100 investment when interest rates are 7.25 percent per year? (Round your answer to 2 decimal places.)
You see the following rate “X”: 0.3% compounded weekly A) What is the APR of X? B) What are the APY of X? C) When compared with rate “Y” that has EAR=16%, which rate would you pick if you were asked to borrow money at that rate for one year? Why?
Your Mark: Problem #10: A person's savings earns an effective annual rate of return of 11%. Income tax is paid on the interest earned at a rate of 40%. If the inflation rate is 4% per year. what is the annual after-tax real rate of return? Problem = 10: Answer as a percentage. correct to 2 decimals. 110 for Grading
Using the rule of 72, approximately how many years are needed to double a $500 investment when interest rates are 10 percent per year? (Round your answer to 2 decimal places.) Period years
Suppose you are going to invest $11,000 per year for six years. The appropriate interest rate is 9 percent. What is the future value if the payments are made on the last day of the year? What if the payments are made on the first day of the year? a) $82,756.68; $90,204.78 b) $90,204.78; $82,756.68 c) $49,345.10; $53,786.16 d) $53,786.16; $49,345.10

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