Q: Suppose the interest rate is3.6%. a. Having $650 today is equivalent to having what amount in one…
A: Given: Present value = $650 Periodic interest rate = 3.6% per period (annum) n= number of periods =…
Q: Which would you prefer, $650 today or $650 in one year? Does your answer depend on when you need the…
A: a. Having $200 today is equivalent to having 650 × 1.036 = $673.4 in one year. future value =…
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A: Deflation rate (d) = 2% Nominal interest rate (r) = 1.75%
Q: what should the nominal rate of interest be?
A: Nominal interest rate (NIR) refers to a interest rate which an investor is expect from his…
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A: Present value refers to the current value of a future sum of money, taking into account a specified…
Q: If the risk-free rate of interest (r.) is 10%, then you should be indifferent between receiving $100…
A: Given: Risk free interest rate (rf) = 10% =0.10 Payment in 1 year = $100
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A: Present value = Future value * (1 + discount rate)-No. of periods
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A: Perpetuity = $500 A. Interest rate = 9% B. Interest rate =18%
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A: The future value (FV) is the value of an investment or sum of money at a specified future date,…
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A: The Rule of 72:The Rule of 72 is a simple, effective rule that is frequently used to determine how…
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A: nominal interest rate = nr = 5% Inflation rate = ir = 3%
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A: P = A/ (1+rt) Where, A = Future value P = Present value r =rate of interest t = time
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A: Information Provided: Amount = $7000.00 Rate = 15% T = 0.75 (39 weeks / 52 weeks)
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A: Present Value refers to a concept that states the discounted value or say value at today's time of…
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A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…
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A: Present value (PV) is the current value of a future payment, stream of payments, or investment,…
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A: Time value of money: The time value of money concept states that the value of money today is worth…
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Q: Suppose we observe the following rates: 1R₁ = 0.80%, 1R₂ = 1.25%, and E(271) = 0.941%. If the…
A: Variables in the question: 1R1=0.80% =0.0081R2=1.25% =0.0125E(2r1)=0.941% =0.00941
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A: Data given: Annual Interest rate=12.9% compounded daily. (Annual means N=1 year)
Q: 1. This problem relates to Future Value, and Future income streams. Assume continuous compounding of…
A: PRESENT VALUE Present value, also known as present discounted value, is the value of an expected…
Q: Suppose the risk-free interest rate is 4.6%. Having $600 today is equivalent to having what amount…
A: Money has time value and value of money change according to the time.
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A: When we make an investment or deposit an amount today it grows with passage of time. This is because…
Q: Determine the present value P that must be invested to have the future value A at simple interest…
A: Given: Future value (A) =$5000.00 Rate (r) = 15% = 0.15 Time t=312=0.25
Q: If we require a 5% real return and we expect inflation to be 2%, what is the nominal rate of…
A: Nominal rate of interest =Real return + inflation.
Q: When interest is compounded continuously, the rate of change of the amount x of the investment is…
A: Continuous Compounding interest assumes interest is compounded and added back into the balance an…
Q: The present value represents the amount of money you would have to deposit today in order to match…
A: Present value is the current worth of a sum of money that is to be received or paid in the future,…
Q: Calculating Real Rates of Return IfTreasury bills are currently paying 4.7 percent and the inflation…
A: Real rate of return refers to the return after the adjustment of the inflation rate.
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- PV = Cash Flow/Interest Rate is the present value shortcut formula for which of the following: * A perpetuity A single cash flow in the future A growing perpetuity An annuityCompute the present value if future value (FV) = $4892, interest rate (r) = 14.0%, and number of years (t) = 16.Use these present value tables to answer the question that follow. Below is a table for the present value of $1 at Compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables above, what is the present value of $16,491.00 (rounded to the nearest dollar) to be received at the end of each of the next four years, assuming an earnings rate of 12%? a.$59,450 b.$16,491 c.$50,083 d.$39,611 Use these present value tables to answer the question that follow. Below is a table for the present value of $1 at Compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Below is a…
- For each of the following situations involving single amounts, solve for the unknown (?). Assume that interest is compounded annually. (i = interest rate, and n = number of years) Present Value Future Value i n1. ? $ 40,000 10% 52. $ 36,289 65,000 ? 103. 15,884 40,000 8 ?4. 46,651 100,000 ? 85. 15,376 ? 7 20To estimate when your money will be worth half of what it is worth today, divide 72 by the expected average annual rate of inflation. If the long-term annual rate of inflation is 3%, in how many years will your money be worth half of its current value? What if the average annual inflation rate increases to 4%?Suppose the risk - free interest rate is 4.2%.a. Having $200 today is equivalent to having what amount in one year?b. Having $200 in one year is equivalent to having what amount today?c. Which would you prefer, $200 today or $200 in one year? Does your answer depend on when you need the money? Why or why not?a. Having $200 today is equivalent to having what amount in one year?Having $200 today is equivalent to having Sin one year. (Round to the nearest cent.)
- Why is a dollar today worth less than a dollar sometime in the future?Provided are links to the present and future value tables: (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your answer to the nearest whole dollar.) a. How much would you have to deposit today if you wanted to have $55,000 in three years? Annual interest rate is 10%. b. Assume that you are saving up for a trip around the world when you graduate in three years. If you can earn 6% on your investments, how much would you have to deposit today to have $15,000 when you graduate? (Round your answer to 2 decimal places.) c-1. Calculate the future value of an investment of $666 for ten years earning an interest of 9%. (Round your answer to 2 decimal places.) c-2. Would you rather have $666 now or $1,800 ten years from now? d. Assume that a college parking sticker today costs $80. If the cost of parking is increasing at the rate of 6% per year, how much will the college parking sticker cost in seven years? (Round your answer to 2 decimal…6. If the effective interest rate is i per period and you invest b dollars at time 0, then the value at time n is b(1 + i)”. For example, if at time 0 you invest $100 at an effective interest rate of 6% per year, then the value at time 1 is $100(1+0.06) = $106. dollars. At time 2, the value will be $100 (1 + 0.06)² = $112.36. Similarly, the present value (value at time 0) of $100 received 2 years from now would be $100(1+0.06)-²≈ $88.99. Sometimes it's convenient to define d = 1/(1 + i) so that we would have $100(1+i)n = $100d". If the interest rate per year is i compounded semiannually, then the effective annual interest rate is (¹ + 2)²³ - 1₁ 1. For example, if the interest rate is 6% per year compounded semiannually, the effective annual interest rate is 1 + .06 2 2 - 1 ≈ 6.09%. If the interest rate per year is i compounded quarterly, then the effective annual interest rate is 4 (¹ + 4) * - 1 1. (a) If the interest rate is 6% per year compounded quarterly, what is the effective…
- Listen The future value of $100 deposited today (assuming positive interest rates and a time difference between the present and the future): 1) will always be less than $100. 2) will always be equal to $100. 3) will always be greater than $100. depending on the exact interest rate and on the precise amount of time difference between the present and the future, can be less than $100, greater than $100, or equal to $100. 5) None of the statements above are correct. 4)If the interest rate is 6% and the average inflation rate is 3.1%, what is the approximate future value of $75,000 in 20 years? $42,340 $89,743 $240,535 $132,852Suppose the interest rate is 3.9%. a. Having $350 today is equivalent to having what amount in one year? b. Having $350 in one year is equivalent to having what amount today? c. Which would you prefer, $350 today or $350 in one year? Does your answer depend on when you need the money? Why or why not? a. Having $350 today is equivalent to having what amount in one year? It is equivalent to $. (Round to the nearest cent.)
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