You have an investment opportunity that promises to pay you $20,000 at a future date. You can earn 5% mpounded semiannually on similar investments. How much would you be willing to invest assuming you will ceive the amount at the end of (a) three years, (b) four years, or (c) five years? rmulas should include the =PV function and return a POSITIVE value. Future value Additional amount received at the end of each semiannual period Interest rate Compounded semiannually $20,000 $0 5% 2 Compounding periods per ye
You have an investment opportunity that promises to pay you $20,000 at a future date. You can earn 5% mpounded semiannually on similar investments. How much would you be willing to invest assuming you will ceive the amount at the end of (a) three years, (b) four years, or (c) five years? rmulas should include the =PV function and return a POSITIVE value. Future value Additional amount received at the end of each semiannual period Interest rate Compounded semiannually $20,000 $0 5% 2 Compounding periods per ye
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:1. You have an investment opportunity that promises to pay you $20,000 at a future date. You can earn 5%
compounded semiannually on similar investments. How much would you be willing to invest assuming you will
receive the amount at the end of (a) three years, (b) four years, or (c) five years?
Formulas should include the =PV function and return a POSITIVE value.
Future value
Additional amount received at the end of each semiannual period
Interest rate
Compounded semiannually
$20,000
$0
5%
2 Compounding periods per year
Investment Term
Present Value
3 Years
4 Years
5 Years
2. If, in addition to the $20,000 future value, you receive an additional $1,000 at the end of each semiannual
period, how much would you be willing to invest assuming the investment spans (a) three years, (b) four years, or
(c), five years?
Formulas should include the =PV function and return a POSITIVE value.
Additional amount received at the end of each semiannual period
$1,000
Investment Term
3 Years
4 Years
5 Years
Present Value
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