Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Suppose an interest rate of 4% 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?
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- Suppose we invest £100,000 at a semi-annually compounded interest rate of 6% for 1 year. What are the gross and net returns? Do the same if this was a monthly compounded rate and a continuously compounded rate. Compare the three net returns to the interest rate. Can you explain the ordering of these 4 quantities?arrow_forward5. Present value of annuities and annuity payments The present value of an annuity is the sum of the discounted value of all future cash flows. You have the opportunity to invest in several annuities. Which of the following 10-year annuities has the greatest present value (PV)? Assume that all annuities earn the same positive interest rate. An annuity that pays $500 at the beginning of every six months An annuity that pays $1,000 at the end of each year An annuity that pays $500 at the end of every six months An annuity that pays $1,000 at the beginning of each year You bought an annuity selling at $2,867.74 today that promises to make equal payments at the beginning of each year for the next twelve years (N). If the annuity's appropriate interest rate (1) remains at 9.50% during this time, then the value of the annual annuity payment (PMT) is $375.00 You just won the lottery. Congratulations! The jackpot is $35,000,000, paid in twelve equal annual payments. The first payment on the…arrow_forwardDetermine the present value P you must invest to have the future value A at simple interest rate r after time t. A = $14,000, r = 7.5%, t = 8 yearsarrow_forward
- Suppose Snli 40 and (1 + i)n = 3.7, where i is an effective annual interest rate. What is the present value of an annuity-immediate which has annual payments of 150 for 3n years?arrow_forwardWhat is the Discounted Present Value (DPV) if you expect to receive $8,000 in year 1, $9,000 in year 2 and $7,000 in year 3, when the interest rate is 8% in each year? Round your answer to one (1) decimal, do not write the dollar sign. Use the minus sign where appropriate.arrow_forward4. If you deposit $1000 in one year, $2000 in two years, and $3000 in three years, how much will you have in three years? Assume a 7 percent annum interest rate. NPV FVarrow_forward
- Approximately how long will it take to quadruple a sum of money at 5% interest?arrow_forwardSuppose that the interest rate is 5 percent. Instructions: Enter your answers rounded to 2 decimal places. a. What is the future value of $100 six years from now? $ How much of the future value is total interest? $ b. By how much would total interest be greater at an interest rate of 7 percent than at an interest rate of 5 percent?arrow_forwardHow long will it take to double your savings if you earn 3.6 percent interest, compounded annually? O 17.78 years O 18.04 years O 18.67 years O 19.42 years 19.60 yearsarrow_forward
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