Kirk Van Houten, who has been married for 24 years, would like to buy his wife an expensive diamond ring with a platinum setting on their 30-year wedding anniversary. Assume that the cost of the ring will be $10,000 in 6 years. Kirk currently has $4,515 to invest. What annual rate of return must Kirk earn on his investment to accumulate enough money to pay for the ring? You are considering investing in a security that will pay you $3,000 in 32 years. a. If the appropriate discount rate is 11 percent, what is the present value of this investment? b. Assume these investments sell for $1,315 in return for which you receive $3,000 in 32 years. What is the rate of return investors earn on this investment if they buy it for $1,315?
Kirk Van Houten, who has been married for 24 years, would like to buy his wife an expensive diamond ring with a platinum setting on their 30-year wedding anniversary. Assume that the cost of the ring will be $10,000 in 6 years. Kirk currently has $4,515 to invest. What annual
You are considering investing in a security that will pay you $3,000 in 32 years.
a. If the appropriate discount rate is 11 percent, what is the
b. Assume these investments sell for $1,315 in return for which you receive $3,000 in 32 years. What is the rate of return investors earn on this investment if they buy it for $1,315?
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