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A2 5b
This question consists of three parts. When performing the calculations, keep as many decimal places as you can for intermediate answers, but round your final answers to two decimal places.
b. You have purchased a three-year inflation-indexed investment. This investment will pay you $X every six months, with each payment adjusted upward for inflation. Let’s say that the proposed first payment is $300 (before inflation adjustment), the average
may i please have the answer in formula version?
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- ou can assume that all payments are made at the beginning of the period and use "1" for the "type" argument in the formula. A. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded annually? B B. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded quarterly? 4 5 6 27 28 29 C. Suppose you invest St $ 570 monthly. What is the future value of the investment in 29 years, if interest at 5% is compounded monthly? Question 1 Question 2 + Ready Accessibility: Investigate MAR 17 A W +If you invest $9,700 per period for the following number of periods, how much would you have received at the end? Use Appendix C. (Round "Factor" to 3 decimal places. Round the final answers to the nearest whole dollar.) a. 11 years at 9 percent Future value $ b. 16 years at 11 percent Future value $ c. 30 periods at 10 percent Future value $QUESTION 1 Investment A will make N annual payments of $300.00 with the first of the N payments due immediately. Investment A has a value of $20000.00. Investment B is an ordinary annuity that will make (N minus 1) annual payments of $300.00 with the first payment due in one year from today. If investment A and investment B have the same expected return, then what is the value of investment B? O $19700.80(plus or minus $0.10) O $19700.00(plus or minus $0.10) O $19701.70(plus or minus $0.10) O $19701.10(plus or minus $0.10) O None of the above is within $0.10 of the correct answer
- (1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest rate is 10%, compounded semiannually? (2) What is the PV of the same stream? (3) Is the stream an annuity? (4) An important rule is that you should never show a nominal rate on a time line or use it in calculations unless what condition holds? (Hint: Think of annual compounding, when INOM = EFF% = IPER.) What would be wrong with your answers to parts (1) and (2) if you used the nominal rate of 10% rather than the periodic rate, INOM/2 = 10%/2 = 5%?uestion 1: Solve the following TVM problems using Excel formulas. You MUST use Excel formulas (FV or PV) to receive credit. ou can assume that all payments are made at the beginning of the period and use "1" for the "type" argument in the formula. A. Suppose you invest 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded annually? B. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded quarterly? C. Suppose you invest $ 570 monthly. What is the future value of the investment in 29 29 years, if interest at + 5% is compounded monthly? 5 6 7 8 19 20 21 22 23 24 25 26 27 28 29 Question 1 Question 2 + Ready Accessibility: Investigate MAR 17 A 国 W X2. You are comparing two annuities which offer monthly payments of $1,000 for five years and pay 1.0 percent interest per month. Annuity A will pay you on the first of each month while annuity B will pay you on the last day of each month. Which one of the following statements is correct concerning these two annuities?A. Both annuities have the same future value as of ten years from today.B. Both annuities are of equal value today.C. Annuity B has a higher present value than annuity AD. Annuity B is an annuity due.E.Annuity A has a higher future value than annuity B.
- The two-year interest rate is 11.2% and the expected annual inflation rate is 5.6%. a.What is the expected real interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b-1. If the expected rate of inflation suddenly rises to 7.6%, what does Fisher’s theory say about how the real interest rate will change? multiple choice Real rate increases Real rate does not change Real rate decreases b-2. If the expected rate of inflation suddenly rises to 7.6%, what will be the new nominal rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)The two-year interest rate is 10.8% and the expected annual inflation rate is 5.4%. a.What is the expected real interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b-1. If the expected rate of inflation suddenly rises to 7.4%, what does Fisher’s theory say about how the real interest rate will change? multiple choice Real rate does not change Real rate increases Real rate decreases b-2. If the expected rate of inflation suddenly rises to 7.4%, what will be the new nominal rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)You are trying to value the following investment opportunity: The investment will cost you $22151 today. In exchange for your investment you will receive monthly cash payments of $5195 for 9 months. The first payment will occur at the end of the first month. The applicable effective annual interest rate for this investment opportunity is 7%. Calculate the NPV of this investment opportunity. Round to two decimals (do not include the $-sign in your answer).
- 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 %Question 2. Your crazy banker presents another investment opportunity for 2022, where you are told that for the first six months of the year you will have an APR of r1 compounded monthly, and for the second half of the year the APR will be r2 compounded monthly. Assume that interest compounds on the 28th day of each month. The banker tells you that for the first six months of the year the effective annual rate is a1 = 6%, but they refuse to divulge the value of r1 directly. You choose to invest $1000 on January 1, 2022, and decide to withdraw all funds from the account on June 30, 2022. What was the value of your account upon withdrawal? The banker then informs you that for the last six months of the year the effective continuous rate is c2 = 4%. You decide that it would be nice to have exactly $2000 in this account on December 15, 2022. What amount of money do you need to invest in this account on July 1, 2022, in order to accomplish this goal?Q3: An investment promises the following payments: March 3 $1000; March 18 $2000; March 26 $3000. If the market interest rate is 5.16%, what is this investment value on March 28? ___________.What is this investment value on March 18? _____________. If you believe your required return for this investment should be 8.19%, how much are you willing to pay for this investment on March 1? _____________