Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- The following investment requires a table factor for a period beyond the table. Calculate the new table factor and the present value (principal). Use Table 11-2. Round your new table factor to five decimal places and your present value to the nearest cent. Compound Amount New Table Factor Term of Nominal Interest Present Investment (years) Rate (%) Compounded Value $36,000 36 7 annually $ Need Help? Read Itarrow_forwardGive only typing answer with explanation and conclusionarrow_forwardSuppose you just bought an annuity with 10 annual payments of $16,500 at a discount rate of 13.75 percent per year. a. What is the value of the investment at the current interest rate of 13.75 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What happens to the value of your investment if interest rates suddenly drop to 8.75 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What happens to the value of your investment if interest rates suddenly rise to 18.75 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.arrow_forward
- An investment will pay you $43,000 in 10 years. If the appropriate discount rate is 7 percent compounded daily, what is the present value? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))arrow_forwardAn investment offers to double your money in 30 months (don’t believe it). What rate per six months are you being offered? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.arrow_forwardSuppose you just bought an annuity with 12 annual payments of $15,700 at a discount rate of 11.75 percent per year. a. What is the value of the investment at the current interest rate of 11.75 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What happens to the value of your investment if interest rates suddenly drop to 6.75 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What happens to the value of your investment if interest rates suddenly rise to 16.75 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. Present value at 11.75 percent b. Present value at 6.75 percent $ 124,187.88 153,795.59 c. Present value at 16.75 percent $ 97,472.81arrow_forward
- (Solving for n with nonannual periods) About how many years would it take for your investment to grow threefold if it were invested at an APR of 11 percent compounded annually? If you invest $1 at an APR of 11 percent compounded annually, about how many years would it take for your investment to grow threefold to S3? lyears (Round to the nearest whole number.)arrow_forwardFuture Value You invest $1,000 today and exect to sell the investment for $2,000 in 10 years. a. Is this a good deal if the investment rate is 6%? b. What if the interest rate is 10%? Why ? Show the calculations in Excel.arrow_forwardAn investment offers the following: a series of $1000 annual payments, starting one year from now, for a total of 12 payments. If your opportunity cost (as an EAR) is 5%, what is the investment worth to you today? Group of answer choices $11,079.20 $9,214.56 $10,103.26 $8,863.25 $10,241.19 Give typing answer with explanation and conclusionarrow_forward
- You are considering in investing one of the two options: Investment A requires a $175,000 upfront payment and generates $12,000 annually, Investment B requires a $250,000 upfront payment. How much should Investment B generate annually so that the total returns from Investment A and B become equal after 25 years? O None of the others O $15,000 O $9,000 O $75,000 O $3,000arrow_forward(Solving for n with non-annual periods) Approximately how many years would it take for an investment to grow twofold if it were invested at 15 percent compounded semiannually? Assume that you invest $1 today. If you invest $1 at 15 percent compounded semiannually, about how many years would it take for your investment to grow twofold to $2? (Hint: Remember to convert your calculator solution to years.) years (Round to one decimal place.) @ 2 W S and x # affer 3 E D 30 13 C $ 4 000 000 F4 R F % 5 V FS T G A 6 B MacBook Air *** F6 Y H & 7 N 44 F7 U ** 8 J DIL FA I M ( 9 K MOSISO DD F9 O V. < -0 F10 L P : I - : A. ; I FIT { [ command option + = ? "1 1 " 13) Nex Next F12 } 1 ◄ delete ūarrow_forwardAssume you invest $5,100 today in an investment that promises to return $6,928 in exactly 10 years. a. Use the present-value technique to estimate the IRR on this investment. b. If a minimum annual return of 9% is required, would you recommend this investment? #69 Part 1 a. The IRR of the investment is enter your response here%. (Round to the nearest whole percent.) Part 2 b. If a minimum return of 9% is required, would you recommend this investment? (Select the best choice below.) A. No, because this investment yields less than the minimum required return of 9%. B. Yes, because a minimum required return of 9% does not compensate for an investment that lasts longer than one year. C. No, because a minimum required return of 9% is an arbitrary choice for an investment of this risk level. D. Yes, because this investment yields more than the minimum required return of 9%arrow_forward
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