The cashflow below represents the amount invested by a company into a special purpose fund starting now and then every even-numbered year, over a ten-year period. Year Imestmet Amount <$E 10 10, 000 The average inflation rate over the period was 4% per year and the company was quoted a market interest rate of 12% by the fund. After 10 years of investment by the company, what would be the purchasing power of the total return on their investment in terms of year zero's (Year 0's) Constant Value dollars?

The cashflow below represents the amount invested by a company into a special purpose fund starting now and then every even-numbered year, over a ten-year period. Year Imestmet Amount <$E 10 10, 000 The average inflation rate over the period was 4% per year and the company was quoted a market interest rate of 12% by the fund. After 10 years of investment by the company, what would be the purchasing power of the total return on their investment in terms of year zero's (Year 0's) Constant Value dollars?

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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2. Northern Flying Science is preparing to buy an aircraft estimated to cost $600,000 by making equal payments at the end of every three months into a sinking fund for five years. Interest earned by the fund is 8% compounded quarterly. a. What is the size of the quarterly payment made to the sinking fund? b. How much of the maturity value of the fund will be interest? c. What is the accumulated value of the fund after two years? d. How much interest will the fund earn in the 15th payment interval? Using BA II Plus Calculator
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A sinking fund is generated for the recovery of bond of $1000000 at the end of 25 years. How much money should be given out of profit each year for the sinking fund, if the investment could earn interest of 4% per annum..?
QuantAlpha fund charges a 12b-1 fee of 1% and maintains an expense ratio of 0.75%. Assume the rate of return on fund portfolio (before any taxes) is 6% per year. How much will an investment of $1000 in the fund grow to after 10 years?
A no-load (commission-free) mutual fund has grown at a rate of 10% compounded annually since its beginning. If it is anticipated that it will continue to grow at this rate, how much must be invested every year so that $120,000 will be accumulated at the end of six years?
You have HK$10,000,000 for a particular investment fund. Suppose the fund pays you interest monthly at interest rate of 24% p.a. The term of the fund is similar to time deposit compounded monthly. What is the Annual Equivalent Rate? For how long this investment doubles?
Ayayai Corporation wants to withdraw $125,900 (including principal) from an investment fund at the end of each year for 9 years. What should be the required initial investment at the beginning of the first year if the fund earns 11%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Required initial investment %24
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You pay $21,600 to the Laramie Fund, which has an NAV of $18 per share at the beginning of the year. The fund deducted a front-end load of 4% at the time of the purchase. The securities in the fund then increased in value by 10% during the year. The fund's expense ratio is 1.3% and is deducted from year-end asset values. What is your rate of return on the fund if you sell your shares at the end of the year? Select the answer closest to the correct return. (Hint: The formula on slide #23 in the "Mutual Funds, ETFs, ..." slide set solves for the gross return. Your rate of return would be the gross return minus 1. The formula on slide # 23 can be written as X(1-f)(1+r-a)" (1-b) Gross Return = (1 - f)(1+r-a)" (1-b) or as Gross Return = X where X is the dollar amount invested. The other variables in the formula (f, r, a, n, b) are all defined in the slide set and in the lecture.) 4.2% 10% 8.7% O 4.7%
How much would a business have to invest in a high-growth fund to receive $13,000 every month for 7 years, receiving the first payment 3 years from now? The investment earns interest at 7.25% compounded monthly.
4. Luxury Yacht company is preparing to buy a new yacht estimated to cost $750000 by making equal payments at the end of every three months into a sinking fund for six years. Interest earned by the fund is 7.5% compounded quarterly. 3 (a) What is the size of the quarterly payment made to the sinking fund? (b) How much of the maturity value of the fund will be interest? (c) What is the accumulated value of the fund after two years? (d) How much interest will the fund earn in the 15th payment interval?
You invested $10,500 at the end of each quarter for 6 years in an investment fund. At the end of year 6, if the balance in the fund was $265,000, what was the nominal interest rate compounded quarterly? 0.00 % Round to two decimal places

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