Week 3Fifteen years ago, you deposited $12,500 into an investment fund. Five years ago, you added anadditional $20,000 to that account. You earned 8%, compounded semi-annually, for the first ten years,and 6.5%, compounded annually, for the last five years.Required: c) If you wish to have $85,000 now, how much should you have invested 15 years ago?
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Week 3
Fifteen years ago, you deposited $12,500 into an investment fund. Five years ago, you added an
additional $20,000 to that account. You earned 8%, compounded semi-annually, for the first ten years,
and 6.5%, compounded annually, for the last five years.
Required:
c) If you wish to have $85,000 now, how much should you have invested 15 years ago?
The present value of the annuity is the current worth of a cash flow series at a certain rate of interest and time period.
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