Week 3 Homework Fin 6000

674 WordsFeb 25, 20163 Pages
Week 3 Assignment 1 ------------------------------------------------- 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…show more content…
$ 22,943.17 | $ 25,008.05 | 3 | $ 25,008.05 | $ 27,258.78 | $ 2,250.72 | $ 25,008.05 | $ - | | | | $ 12,776.33 | |

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