a. Calculate the following Periodic Total Returns on a 5-year investment. To your calculations, assume that you have selling costs of 5% Year NCF (€) Market Value (€) Total Return 95,000 95,000 1 10,000 98,000 5,000 100,000 8,000 101,000 4 12,000 103,000 5 135,000 117,000 b. If the quarterly Income Return is 2.2% and the Quarterly Capital Return is 0.4%, calculate the Annual Total Return of the investment 2.

a. Calculate the following Periodic Total Returns on a 5-year investment. To your calculations, assume that you have selling costs of 5% Year NCF (€) Market Value (€) Total Return 95,000 95,000 1 10,000 98,000 5,000 100,000 8,000 101,000 4 12,000 103,000 5 135,000 117,000 b. If the quarterly Income Return is 2.2% and the Quarterly Capital Return is 0.4%, calculate the Annual Total Return of the investment 2.

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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Investment If $5000 is invested for 6 years atinterest rate r (as a decimal), compounded annually, the future value of the investment is given byS = 5000(1 + r) 6dollars.a. Find the future value of this investment for selectedinterest rates by completing the following table. b. Graph this function for 0 <= r <= 0.20.c. Compute the future value if the rate is 10% and20%. How much more money is earned at 20%?
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Q1 (A). An investment of $100 produces rate of return as follows In year 1: a gain of 10 percent In year 2: a loss of percent In year 3: a loss of 8 percent In year 4: a gain of 3 percent. Calculate the value of the investment at the end of the fourth year and calculate the mean annual rate of return.
Consider the following investment alternatives: Investment Rate Compounding A 6.502% Annual Daily Quarterly 6.3234% C 6.3969% 6.3867% Monthly Which alternative offers you the highest effective rate of return? A. Investment A B. Investment B C. Investment C D. Investment D
Find the PV and FV of an investment that makes the following end-of-year payments. The interest rate is 8%. Year Payment 1 100 2 200 3 400 Rate = 8% To find the PV, use the NPV function: PV = Year Payment x (1 + I )^(N-t) = FV1 100 1.17 116.64 2 200 1.08 216.00 3 400 1.00 400.00 Sum = ?PV = ?FV of PV = ?
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Today (t=0), you invested the starting prinipal of 1536 dollars. At the end of the first, second and third years, you will receive payments in the amount of 40%, 45% and 50% respectively of your initital investment. What is the net present value (NPV) of the investment if the minimum attractive rate of return (MARR) is 7.8%. Calculate the MARR for an NPV between $0 and $1 and draw the cash flow diagram.

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