2. 4. Briefly explain the following Time value of money L IL n 0 1 Doarp Difference between simple and compound interest What is inflation? What are the reasons of high inflation Difference between nominal and effective interest rate What is the difference between CPI and PPI IV. V. Bank A pays 6% simple interest on its savings account balances. Bank B pays 5.5% interest compounded annually. If you made a $10,000 deposit in each bank, which bank provides you more money at the end of 15 years? What will be the amount accumulated by each of the given present investments? (a) $5,500 in 10 years at 9% compounded semiannually. (b) $12,500 in 15 years at 8% compounded quarterly. (c) $13,600 in seven years at 6% compounded monthly. Find Net present worht (NPW), and payback period of the following projects with MARR 18% A -2500 B -7000 C -5000

2. 4. Briefly explain the following Time value of money L IL n 0 1 Doarp Difference between simple and compound interest What is inflation? What are the reasons of high inflation Difference between nominal and effective interest rate What is the difference between CPI and PPI IV. V. Bank A pays 6% simple interest on its savings account balances. Bank B pays 5.5% interest compounded annually. If you made a $10,000 deposit in each bank, which bank provides you more money at the end of 15 years? What will be the amount accumulated by each of the given present investments? (a) $5,500 in 10 years at 9% compounded semiannually. (b) $12,500 in 15 years at 8% compounded quarterly. (c) $13,600 in seven years at 6% compounded monthly. Find Net present worht (NPW), and payback period of the following projects with MARR 18% A -2500 B -7000 C -5000

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.12: Uneven, Or Irregular, Cash Flows

Problem 3ST

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Which one is correct answer please confirm? Q1: If the return on U.S. Treasury bills is 7.02%, the risk premium is 2.32%, and the inflation rate is 4.16%, then the real rate of return is ____. a. 2.86% b. 7.02% c. 4.70% d. 6.48%
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