You plan to invest $1,000 per year in a diversified investment fund that you expect will earn a rate of return of 8% per year (its cost of capital). a. If you invest for 10 years (a total of $10,000), starting one year from today, what is the present value today of your total investment? Show your work. b. What will be the expected future value of your total investment at the end of the 10 years? Show your work.
You plan to invest $1,000 per year in a diversified investment fund that you expect will earn a rate of return of 8% per year (its cost of capital). a. If you invest for 10 years (a total of $10,000), starting one year from today, what is the present value today of your total investment? Show your work. b. What will be the expected future value of your total investment at the end of the 10 years? Show your work.
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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