Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
$9,000 for his CD investment. If the bank is offering a 3.5%
interest rate, compounded annually, how much will the CD be worth at maturity if Jonathan picks aa.
three-year
investment period?b.
five-year
investment period?c.
eight-year
investment period?d.
fifteen-year
investment period?a. How much will the
$9,000
CD investment at
3.5%
interest rate be worth at maturity if Jonathan picks a
3-year
investment period?(Round to the nearest cent.)
b. How much will the
$9,000
CD investment at
3.5%
interest rate be worth at maturity if Jonathan picks a
5-year
investment period? (Round to the nearest cent.)
c. How much will the
$9,000
CD investment at
3.5%
interest rate be worth at maturity if Jonathan picks a
8-year
investment period? (Round to the nearest cent.)
d. How much will the
$9,000
CD investment at
3.5%
interest rate be worth at maturity if Jonathan picks a
15-year
investment period? (Round to the nearest cent.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- show steps to calculation With screenshots of excel!!! As a borrower, you have the option to choose between two 30-year, monthly-payment loans: 7% interest rate with 3 points, versus 7.5% interest with one-half point. (a) Which loan option would you choose if you had a 10-year expected prepayment horizon? (b) Which would you choose if you expect to pay off this loan in 5 years?arrow_forward1. Calculate the future value of $9,000 invested (single amount) for ten years in an account with an APR of 6.3%. (Do not round interest rates.) a. If compounded annually? Future value = P (1+r)t 9,000(1+0.063)¹⁰= b. If compounded semiannually? c. If compounded monthly? d. Given equal rates, time, and investment amount, what effect does the frequency of compounding have on future values? What effect does the frequency of discounting have on present values? 2. Determine the rate that would be earned on a $25,000 investment if $100,000 is paid back in 25 years. Based on your answer, what factors would you consider in whether to invest or not. 3. A company has a $400 million liability that is due in 20 years. If the relevant discount rate is 5.25 percent, what is the present value of the liability? 4. What is the present value of an investment that will pay you $75 per year forever if the appropriate rate of return is 3%?arrow_forwardAssume that you can invest to earn a stated annual rate of return of 12 percent, but where interest is compounded semiannually. If you make 20 consecutive semiannual deposits of $500 each, with the first deposit being made today, what will your balance be at the end of Year 20? Group of answer choices $52,821.19 $57,900.83 $58,988.19 $62,527.47 $64,131.50arrow_forward
- 不 a. Use the appropriate formula to determine the periodic deposit. b. How much of the financial goal comes from deposits and how much comes from interest? Periodic Deposit Rate Time Financial Goal $? at the end of each year 3% compounded annually 15 years $130,000 Click the icon to view some finance formulas. a. The periodic deposit is $ (Do not round until the final answer. Then round up to the nearest dollar as needed.) this View an example Get more help 4 Clear all Checarrow_forwardEmit wants to make an initial payment P at Year 0 hoping to get $400 annually from Year 5 to Year 10 (6 Years). How much should the initial payment be at an 8% interest rate?arrow_forwardYou want to invest $18,000 and are looking for safe investment options. Your bank is offering you a certificate of deposit that pays a nominal rate of 6% that is compounded semiannually. What is the effective rate of return that you will earn from this investment?arrow_forward
- If you could solve Option 2 with formulas that would be great! Option 2: Borrow $5,000,000 from a bank quoted an annual interest rate of 3.8%, do monthly payments during the payback period of 6 years. Find periodic and annual payments, also cumulative interest and cumulative principal.arrow_forwardYou are trying to value the following investment opportunity: The investment will cost you $22151 today. In exchange for your investment you will receive monthly cash payments of $5195 for 9 months. The first payment will occur at the end of the first month. The applicable effective annual interest rate for this investment opportunity is 7%. Calculate the NPV of this investment opportunity. Round to two decimals (do not include the $-sign in your answer).arrow_forwardGive typing answer with explanation and conclusionarrow_forward
- Future value. Grand Opening Bank is offering a one-time investment opportunity for its new customers. A customer opening a new checking account can buy a special savings bond for $800 today, which the bank will compound at 6.5% for the next ten years. The savings bond must be held for at least five years, but can then be cashed in at the end of any year starting with year five. What is the value of the bond at each cash-in date up through year ten? (Use an Excel spreadsheet to solve this problem.) What is the value of the savings bond at the end of year five? $nothing (Round to the nearest cent.) What is the value of the savings bond at the end of year six? $nothing (Round to the nearest cent.) What is the value of the savings bond at the end of year seven? $nothing (Round to the nearest cent.) What is the value of the savings bond at the end of year eight? $nothing (Round to the nearest cent.) What is the value of the savings bond at…arrow_forwardFuture value (with changing years). Dixie Bank offers a certificate of deposit with an option to select your own investment period. Jonathan has $6,000 for his CD investment. If the bank is offering a 5.5% interest rate, compounded annually, how much will the CD be worth at maturity if Jonathan picks a a. two-year investment period? b. five-year investment period? c. eight-year investment period? d. twenty-year investment period? a. How much will the $6,000 CD investment at 5.5% interest rate be worth at maturity if Jonathan picks a 2-year investment period? $4 (Round to the nearest cent.) %24arrow_forwardWhat size loan must we take today with a 14% compound interest rate to have end-of-year payments of $1400, $1320, $1240, $1160, and $1080 for the next five years, respectively? In other words, if you take out a loan today, and after making all five payments, above, the loan is paid off, what is the value of that loan? Answer:arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education