Suppose you deposit shs 5,000,000 into an account earning 4 percent interest, compounded monthly. a) How many years will it take for your account to be worth shs7, 500,000? b) Suppose in addition to the initial shs5, 000,000 deposit, you will make monthly contributions of shs50,000. How many years will it take for the account to grow to shs7, 500,000 in this case? than monthly c) How does your answer change if you make quarterly deposits of shs150, 000 rather contributions of shs 50,000? Explain the reason for any difference in your answer from part b. Maintain the assumption that interest compounds monthly.
Suppose you deposit shs 5,000,000 into an account earning 4 percent interest, compounded monthly. a) How many years will it take for your account to be worth shs7, 500,000? b) Suppose in addition to the initial shs5, 000,000 deposit, you will make monthly contributions of shs50,000. How many years will it take for the account to grow to shs7, 500,000 in this case? than monthly c) How does your answer change if you make quarterly deposits of shs150, 000 rather contributions of shs 50,000? Explain the reason for any difference in your answer from part b. Maintain the assumption that interest compounds monthly.
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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Transcribed Image Text:2. Suppose you deposit shs 5,000,000 into an account earning 4 percent interest, compounded monthly.
a) How many years will it take for your account to be worth shs7, 500,000?
b) Suppose in addition to the initial shs5, 000,000 deposit, you will make monthly contributions of shs50, 000.
How many years will it take for the account to grow to shs7, 500,000 in this case?
c) How does your answer change if you make quarterly deposits of shs150, 000 rather than monthly
contributions of shs 50,000? Explain the reason for any difference in your answer from part b. Maintain the
assumption that interest compounds monthly.
3. (a)What do you understand by ordinary share? Preference share?
(b)Give features of each of the two?
(c)The Brigapenski Company has just paid a cash dividend of Tshs 20 per share. Investors require a 16%
return from investments such as this. If the dividend is expected to grow at a steady 8% per year, what is the
current value of the stock? What is the stock's worth in 5 years?
END
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