In year zero, you invest P10,000 in a 15% security for 5 years. During that time, the average annual inflation is6%. How much is the equivalent present worth of your account at maturity due to inflation?P15,030.03P20,113.57P18,289.05P16,892.34

Information provided in the given question: r = real rate of interest = (interest on the security -…

Answered: In year zero, you invest P10,000 in a…

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

See similar textbooks

Similar questions

Find the present value of an investment if it is expected to provide annual earnings of $20,000 for 10 years and to have a resale value of $50,000 at the end of that period. Assume a 8% rate and earnings at year end. The present value of 1 at 8% for 10 periods is .46319. The present value of an ordinary annuity at 8% for 10 periods is 6.71008. The future value of 1 at 8% for 10 periods is 2.15892.
"Assume that the interest rate is 8.5% per year and you expect to receive the following stream of annual cash flows (The year 0 cash flow occurs today and the year 4 cash flow occurs exactly 4 years from today): (Year 0: $15,100); (Year 1: $21,100); (Year 2: $12,700): (Year 3: $19,250): (Year 4: $9,550); What is the current Present Value (PVO) of the stream of cash flows?" a)"$68,013- b)"$67,297" c)"$77,700 d)"$62,025" e)$64,399 f)$68,643"
An investor lends $10,000 today, to be repaid in a lump sum at the end of10 years with interest at 10% (= im) compounded annually.What is the real rate of return, assuming that the general price inflation rate is 8% annually?
Assume that the real rate of interest is 2.00 % and the inflation rate is 6.00% What is the value today (i.e. , in Year ) of receiving 12,895.00 exactly 12 years from today ?
What will $205,000 grow to be in 8 years if it is invested today in an account with a quoted annual interest rate of 13% with weekly compounding of interest? $544,981.06 $579,237.24 $706,669.44 $497,676.70 $829,467.73
Calculate the percentage return on a 1-year Treasury bill with a face value of $10 comma 00010,000 if you pay $9 comma 859.819,859.81 to purchase it and receive its full face value at maturity.
How much do you have to deposit today so that beginning 11 years from now you can withdraw $12,000 a year for the next 6 years (periods 11 through 16) plus an additional amount of $24,000 in the last year (period 16)? Assume an interest rate of 9 percent.
Calculate the present values at t = 0 (now) of the following cash flows: j. The first cash flow at t = 1 is $100. Every year thereafter, the payment increases by 3% over the previous year’s payment. This continues for 9 years past the first payment (for a total of 10 payments). What is the present value of this growing annuity if the effective annual discount rate is .02 (2%)? k. $50 every year and a half forever, with the first payment after 1.5 years, where the effective annual rate is .05 (i.e., 5%).
A $2 million deposit earns 7 percent for 13 years. If the account earns 9 percent per year forever after that, how long will it take to grow to $5 million? O zero; the account exceeds $5 million after 13 years O 0.26 year O 0.43 year O 1.18 years
You make an investment into a money market account at time T=0. In year T=5, the value of the money market account will be $5,000. The money market account pays an annual interest of R=6%, and interest is compounded on a quarterly basis. What is the present value of this account?
4. If you deposit $1000 in one year, $2000 in two years, and $3000 in three years, how much will you have in three years? Assume a 7 percent annum interest rate. NPV FV
11. You deposit $1,000 today, $3,000 two years from now, and $5,000 five years from now. How much money will you have at the end of year 5 if the annual compound interest rates for each year are predicted to be different and shown in the table below? Year Interest rate 1. 2 3 4 5 5% 10% 15% 15% 20%

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

In year zero, you invest P10,000 in a 15% security for 5 years. During that time, the average annual inflation is 6%. How much is the equivalent present worth of your account at maturity due to inflation? P15,030.03 P20,113.57 P18,289.05 P16,892.34