Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
10th Edition
ISBN: 9780077835422
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 21, Problem 7PS
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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.)
4. If you receive $116 each month for 28 years and the
discount rate is 0.08, what is the present value?
(show the process and can use financial calculator)
2. If you receive $99 each quarter for 17 years and the
discount rate is 0.05, what is the future value?
(show the process and can use financial calculator)
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Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
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- Give typing answer with explanation and conclusionarrow_forwardPlease solve using a TIMELINE not excel. Pleasearrow_forward3. Suppose you want to have € 0.5 million saved by the time you reach age 30 and suppose that you are 20 years old today. If you can earn 5% (compounding yearly) on your funds, how much would you have to invest today to reach your goal? manually using TVM functions FV Interest rate Time period Compounding frequency Total number of compounding periods Present value of money Present value of money (EUR) (as a decimal) (number of years) (times per year) (EUR) (EUR) 5,000,000 0.05 10 1 10 306,956.63 306,956.63arrow_forward
- Please solve this without excel usage.arrow_forward9. Suppose the interest rate is 3.8%. a. Having $600 today is equivalent to having what amount in one year? b. Having $600 in one year is equivalent to having what amount today? c. Which would you prefer, S600 today or $600 in one year? Does your answer depend on when you need the money? Why or why not? a. Having $600 today is equivalent to having what amount in one year? It is equivalent to $ (Round to the nearest cent.) b. Having $600 in one year is equivalent to having what amount today? It is equivalent to $ (Round to the nearest cent.) c. Which would you prefer, $600 today or $600 in one year? Does your answer depend on when you need the money? Why or why not? "Because money today is worth more than money in the future, $600 today is preferred to $600 in one year. This answer is correct even if you don't need the money today, because by investing the $600 you receive today at the current interest rate, you will have more than $600 in one year." Is the above statement true or…arrow_forwardSuppose the risk-free interest rate is 4.6%. Having $600 today is equivalent to having what amount in one year? (Round to the nearestcent.) Having $600 in one year is equivalent to having what amount today? (Round to the nearestcent.) Which would you prefer, $600 today or $600 in one year? Does your answer depend on when you need the money? Why or why not? (Round to the nearestcent.)arrow_forward
- D7) Consider two riskless perpetuities: (i) pays $120 every year; (ii) pays $10 every month. If the rates of returns of the two perpetuities are the same, investors must buy perpetuity (ii) because it makes more interest payments.arrow_forwardSuppose the interest rate is3.6%. a. Having $650 today is equivalent to having what amount in one year? b. Having $650 in one year is equivalent to having what amount today? c. Which would you prefer, $650 today or $650 in one year? Does your answer depend on when you need the money? Why or why not? a. Having $650 today is equivalent to having what amount in one year? It is equivalent to $____. (Round to the nearest cent.)arrow_forwardWhich would you prefer to earn on your savings? An APR rate of 12.5% or a 1% actuarial rate compounded monthly? Given an APR of r percent, what is the most that the effective rate can earn above the APR rate if it is compounded continuously?arrow_forward
- Could u pls helparrow_forward1) What is the loanable funds market? 2) Calculate the following: You save $100 and want to see how much you will earn based on the following interest rates Interest Rate Value after 1 month -1% ? 0.5% ? 1% ? 2% ? 3) What supply factors affect the Loanable Funds market? 4) What demand factors affect the Loanable Funds market?arrow_forward1. If you receive $176 each month for 12 months and the discount rate is 0.04, what is the future value? (show the process and can use financial calculator)arrow_forward
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