Week 3 Assignment 1
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1. Calculating the Number of Periods
At 8 percent interest, how long does it take to double your money? To quadruple it?
FV = PV (FVF) 8%, t = ?
$2 = $1 (FVF) 8%, t = ?
$2/ 1 = 2.0; so for FVF at 8 %, “t” is approximately 9 years.
2. Perpetuities
An investor purchasing a British consul is entitled to receive annual payments from the British government forever. What is the price of a consul that pays $160 annually if the next payment occurs one year from today? The market interest rate is 4.5 percent.
PV = C / r
PV = $160 / 0.045
PV = $3,555.56
3. Present Value and Multiple Cash Flows
Investment X offers to pay you $6,000 per year for nine
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$ 22,943.17 | $ 25,008.05 | 3 | $ 25,008.05 | $ 27,258.78 | $ 2,250.72 | $ 25,008.05 | $ - | | | | $ 12,776.33 | |
The goal of communications is to make ethics a live, ongoing conversation. If ethics is something that is constantly addressed, referenced frequently in company meetings, and in personal conversations among managers and employees, then people are more aware and more willing to defend the company’s policies when they see or hear of problems. Employees will hold other employees responsible and accountable for living the company’s values.
academic year interest rate of 3.76 percent would pay a 5,032 dollars interest over 10 years,
Poor Dog, Inc. borrowed $135,000 from the bank today. They must repay this money over the next six years by making monthly payments of $2,215.10. What is the interest rate on the loan? Express your answer with annual compounding.
1. This is a closed book exam. You may only have pens, pencils and a calculator at
14. Global Enterprises has just signed a $3 million contract. The contract calls for a payment of $.5 million today, $.9 million one year from today, and $1.6 million two years from today. What is this contract really worth if Global Enterprises can earn 12 percent on its money?
13. What is the formula for the Present Value (PV) for a finite stream of cash flows (1 per year) that lasts for 10 years?
What annual interest rate is needed to produce $200,000 after five years if only $100,000 is invested?
10. An investment of $1,000 today will grow to $1,100 in one year. What is the continuously compounded rate of return?
c) The present value of $500 to be received in one year when the opportunity cost rate is 8 percent (discounting):
If I have lunch with you tomorrow, I ____________ lunch with Tom the next day.
Learning to me is allowing your brain to receive information and then applying in to your life experiences. I feel like face to face learning is better, however, online is more convenient. I prefer face to face because it offers a more personal relationship with your classmates and your professor. Although it is not practical for my life, I do wish I could attend classes in a regular environment. Online provides me that much needed space and opportunity to move at my own pace. Now that I have taken this class, I know that while I am receiving information I will be more aware of the information being delivered because I will now be more intentional with receiving the information.
Sonja is seriously injured in an auto accident. After six months, she is still unable to return to work. She has no income from her job, and the insurance premium payments are financially burdensome. In this case Sonja has an ordinary life insurance with the waiver-of-premium attached so after six months all premiums would be waived if Sonja is totally disabled. Under some policies, a retroactive refund of the premium paid during the first six months would be paid. (Rejda, George, McNamara, 2014).
After the calculations you end up coming out with a rate of 14.87%. The third and final part of question three asks what rate you will need if the interest is compounded semiannually. All you have to do is double the amount of terms and you will come out with a lower number of 7.177%. Since the interest is compounded semiannually that means that you will need to times that number by two and you come out with your final number of 14.35%.
The semi-annual compounded interest rate is 5.2% (a six-month discount rate of 5.2/2 = 2.6%). (15 points)
(Compound value solving for I) at what annual rate would the following have to be investe