QUESTION 1 You just put $1,000 in a bank account that pays 6 percent nominal annual interest, compounded monthly. How much will you have in your account after 3 years? i. ii. You are currently investing your money in a bank account that has a nominal annual rate of 7 percent, compounded monthly. How many years will it take for you to double your money? iii. A real estate investment has the following expected cash flows: Cash Flows $10,000 Year 1 2 25,000 3 50,000 4 35,000 The discount rate is 8 percent. What is the investment's present value?

QUESTION 1 You just put $1,000 in a bank account that pays 6 percent nominal annual interest, compounded monthly. How much will you have in your account after 3 years? i. ii. You are currently investing your money in a bank account that has a nominal annual rate of 7 percent, compounded monthly. How many years will it take for you to double your money? iii. A real estate investment has the following expected cash flows: Cash Flows $10,000 Year 1 2 25,000 3 50,000 4 35,000 The discount rate is 8 percent. What is the investment's present value?

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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Find the required value for each problem. Show the formula used and the counts for each problem. 6. How much more would you earn in three years if you invest $ 10,000 at a compound annual interest rate of 5.75%, instead of at a simple interest rate of 5.75%? 7. What would be the compound annual interest rate you would need to double your investment of $ 1,000 in three years? 8. If your bank pays you 5% annual interest, compounded monthly, how much would you have in ten years if you invest $ 1,000 today? 9. How much would you have to deposit today in a bank account that pays 9.25% annual interest, compounded quarterly, if you expect to have $20,000 at the end of five years? 10. Suppose you invested $ 2,500 in the business that a friend opened and in three years this friend returned $ 3,700 to you. How much was the return on your investment in your friend's business?
5. Present value To find the present value of a cash flow expected to be paid or received in the future, you will the future value cash flow by (1+1)N What is the value today of a $42, 000 cash flow expected to be received 17 years from now based on an annual interest rate of 7% ? $13,296 $10,637 $132, 670 $20, 609 Your broker called carfier today and offered you the opportunity to invest in a security. As a friend, he suggested that you compare the current, or present value, cost of the security and the discounted value of its expected future cash flows before deciding whether or not to invest. The decision rule that should be used to decide whether or not to invest should be. Everything else being equal, you should invest if the discounted value of the security's expected future cash flows is greater than or equal to the current cost of the security. Everything else being equal, you should invest if the current cost of the security is greater than the present value of the security's…
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Part 1 You have P10,000 to invest. You do not want to take any risk, so you will put the funds in a savings account at the local bank. Of the following choices, which one will produce the largest sum at the end of 22 years? An account that compounds interest. please explain 1.1 Annually 1.2 Daily 1.3 Quarterly 1.4 Monthly 2. The company is setting aside funds to acquire a property for its new warehouse. The company needs P74,735 to make the down payment. The company deposits P5,000/month in the fund account which pays 1% per month. As the financial manager you have been tasked to determine how long it will take to accumulate enough funds to acquire the property? 3. Suppose you are 40 years old and plans to retire in exactly 20 years. Twenty one years from now you will need to withdraw P50,000 per year from your retirement fund to add to your SSS pension. Assume you are to live for 85 years, how much money should you place in the retirement fund each year for the next 20…
question 14
You plan to invest $5,000 into an account. If you would like to have $10,000 in 15 years, what rate of return must you earn? Question 5 options: 6.02% 5.24% 4.73% 7.55% 7.11%
Interest Rate? Problem 2 In 4 years, you plan to buy a new car and will need a down payment. How much would you need to invest today in order to have $8,000 in 4 years? Assume interest rates are 4%. Which table will you use for the above calculation? Number of periods? Factor? hapter What is the amount of investment? Problom 3 value of money and Бопа X A P Q S Y
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part : creating a proposal after a number of years of saving up all your pennies you have finally reached a total amount of $ 4,000. you have decided to put your money into a savings account. after an extensive amount of research, you have the following options to choose from : bank 1 offers a 5% annual interest rate compounded monthly. • bank 2 offers a annual interest rate compounded quarterly . bank 3 offers a 5% annual interest rate compounded weekly. decide which bank is the best option to open a savings account for one year. show the total amounts for each bank to justify your answer . 2. decide which bank is the best option to open a savings account for 10 years . show the total amounts for each bank to justify your answer. 3.how much money would you make from saving $ 4000 in the bank selected after 10 years?
QUESTION 2 You project that you will be able to invest $1500 this year, $2000 one year from now, and $2500 two years from today You hope to use the accumulated funds six years from now to use as a $10,000 down payment on a house. Will you achieve your objectives, if the investments earn 8% compounded semiannually? A detailed timeline is required for this question. a) How much will you have in 6 years? b) Did you meet your goal? yes or no a) S b)
2. You want to set up a savings plan for your business that you want to pursue 3 years from now. You assume that in order to start such business you need P310,000 in the bank. How much do you need to save each year in order to have the necessary funds if the current rate of interest is 8.1%? Assume that end-of-year payments are made. Illustrate the cash flow diagram to support your answer.

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