An investor makes a deposit today and earns an average continuous return (force of interest) of 6.5% over the next 4 years. What average continuous returnmust be earned over the subsequent 6 years in order to double the investment at the end of ten years? Answer = %.

An investor makes a deposit today and earns an average continuous return (force of interest) of 6.5% over the next 4 years. What average continuous returnmust be earned over the subsequent 6 years in order to double the investment at the end of ten years? Answer = %.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

See similar textbooks

Related questions

Q: Find the internal rates of return on a cash flow with deposit amounts of A = 40, A₁ = 120, A₂ = 290,…

A: Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of an…

Q: 2. Calculate the 3-day SMA of these stock prices $15, $14, $18, $17 and $16.

A: To calculate the 3-day Simple Moving Average (SMA) of the given stock prices, need to sum up the…

Q: In order to achieve a positive leverage adjusted duration gap (DA-kDL>0) , a financial institution…

A: The leverage-adjusted duration gap (DA-kDL) is a critical metric used by financial institutions to…

Q: Firms in Japan often employ both high operating and financial leverage because of the use of modern…

A: PaerticularsUnitsSales129,000$29Variable costs$9Fixed…

Q: 45. The following data are available relating to the performance of Wildcat Fund and the market…

A: Variables in the question:Average return of Wildcat=18% Average return of Market Portfolio=15% Beta…

Q: Using time value of money tables, calculate the following: The amount a person would have to…

A: Present value is the value of a future cash flow amount as of today. We receive cash flows at…

Q: What is the PV of a continuous stream of cash flows, amounting to $2,140 per year, starting…

A: The Present ValuePresent value refers to the current value of the future cash flows discounted at a…

Q: 1. You just sold a stock for $85. If the stock appreciated at 6% annually, and you owned it for…

A: The concept of TVM refers to the inherent capacity of money to earn interest because of which money…

Q: 2. As information becomes increasingly available additional storage is needed for the handling of…

A: The concept of time value of money is based on the premise that money has time value. A dollar today…

Q: 7. OK State Bank reports total operating revenues of $150 million, with total operating expenses of…

A: The return earned by shareholders after every expense is determined by ROE (Return on Equity).

Q: What is the present value of $1,000 paid at the end of each of the next 100 years if the interest…

A: Payment = p = $1000Time = t = 100 YearsInterest rate = r = 4%

Q: How much money do you need today to ensure that you will have $18000 in 4 years, assuming you can…

A: The present value of money is the amount that a future cash flow is worth today, taking into account…

Q: You purchase a 20-year bond that has a par value of $1,000 and pays an annual coupon of $100 ($50…

A: A bond is a debt instrument that obliges its issuer to pay the holder a series of regular fixed…

Q: maximum precision can be obtained. (Unless indicated otherwise, enter your answers rounded to the…

A: We can determine the PV of salvage value and PV of annual cash inflow using the formula below:MARR =…

Q: Suppose that Bank A pays 1.89% interest compounded quarterly on a 5-year CD, while Bank B pays 1.88%…

A: When the borrower borrows a loan from the lender, he has to pay a rate of interest on the borrowed…

Q: person owes a credit institution $20,000 that must be paid in 3 years with interest at 12% effective…

A: A person owes a credit institution $20,000 and must be paid in 3 years at 12% effective rate and…

Q: Suppose you buy 200 shares of Kohls stock at a price of $26 47 per share You use some of your own…

A: Initial margin is the initial amount required in an equity account to buy stocks in the market and…

Q: A club raised 175% of its goal for a charity. The club raised $763. What was the goal?

A: Percentage of Goal refers to the proportion or fraction of a target or objective that has been…

Q: Need more explaniation for part C but I don't think it's the right answer. I got a different answer…

A: Preferred stocks carry a fixed rate of dividend and these are preferred in payment of dividends as…

Q: If you invest $2000 per year starting today, how many years would you need to save at 20% compounded…

A: The deposits done on a fixed interval and fixed rate of interest are known as an annuity. This helps…

Q: nvestment Option "South" This potential investment is less risky and shorter term, so it has a…

A: Minumum rate of return, r = 8.30%Initial outlay = $121,500Wind down cost = $12,1506.The present…

Q: Investment Option "North" This potential investment is a little more risky and longer term, so it…

A: Net present value is the sum of present values of all cash flows associated with a project. This is…

Q: 2. The information released on a particular corporation at closing shows a Chg of 4.85. WF does this…

A: In the stock market there is open trading of stocks and prices move up and go down and this happens…

Q: This year, the Tastee Partnership reported income before guaranteed payments of $158,000. Stella…

A: Variables in the question: Reported income before guaranteed payments=$158,000Salary per month of…

Q: EFG Holdings Corporation will be acquiring 100% ownership of HIJ Corporation. The latter currently…

A: To calculate the value of control over HIJ that EFG Holdings Corporation would still avoid if it…

Q: An insurance company is analyzing the following three bonds, each with five years to maturity,…

A: In general, lower coupon bonds have a higher duration than a similar higher coupon bond. This is…

Q: /Interest Rate is the present value shortcut formula for which of the following: * A perpetuity A…

A: Present value is the equivalent value today of the future cash flow based on the time and interest…

Q: 1 2 Growth rate 3 Discount rate 4 A B F NPV, DISCOUNT AND GROWTH RATES 10% 15% $500 $100 Initial…

A: Net present value (NPV) is a technique used in capital budgeting, where NPV is determined using time…

Q: )Anderson County has 35 older-model school buses that will be salvaged for $5000 each. These buses…

A: Annual Worth (AW) analysis is also an evaluation method for capital investment. This can be…

Q: Bob buys a property that costs $1,000,000. The property is projected to generate NOI as follows:…

A: Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of an…

Q: Nataro, Inc., has sales of $662,000, costs of $335,000, depreciation expense of $80,000, interest…

A: Variables given in the question:Sales = $662,000Costs = $335,000 Depreciation expense =…

Q: What financial decission listed below are crucial for a multinational corporation? a) Business…

A: The multinational corporations which operate on large scale and have global presence as they…

Q: A local bank advertises the following deal: "Pay us $100 at the end of each year for 11 years and…

A: In perpetuity is type of annuity in which there are payments forever and for indefinite period of…

Q: Cisco is selling at $45 a share. You would like to buy 200 shares for $42 per share using 60%…

A: Margin money is just like a loan and is offered by the broker to their investing clients giving…

Q: Bond Maturity Liquidity Default Risk YTM A2 High Low 3.50% B2 High High 4.50% C8 High Low 5.50% D8…

A: The liquidity risk premium is a concept in finance that represents the additional return or yield…

Q: Your company is planning to borrow $2.75 million on a 5-year, 16%, annual payment, fully amortized…

A: A loan refers to a contract between two parties where one of the parties forwards money to the other…

Q: the best way to calculate the appropriate Discount Rate

A: In the valuation of the companies there is need of discount rate to calculate net present value of…

Q: An investor enters a three-year swap contracts by paying fixed price and receive spot price of…

A: Swaps are financial agreements between two parties to exchange future cash flows based on…

Q: A refinery has 250 tons of CPO on hand. This will be held over the following three months. He aims…

A: Hedging is a risk management strategy employed by individuals or organizations to mitigate potential…

Q: .On 4th September 2019, the Dow Jones Industrial Average is closed at 26355.47, the value of DJIA…

A: To calculate the average market price of DJIA component stocks and the cost of a round lot of all…

Q: Today is Amy's 24th birthday. Starting today, Any plans to begin saving for her retirement, which…

A: Future value refers to the anticipated value of an investment or asset at a specific point in the…

Q: Suppose Crater Co's stock price is $40 and it has earnings per share (EPS) of $4. Non-Crater Co is…

A: In case of relative valuation we determine the value of a company based on different multiples like…

Q: Consider the following repricing buckets: Repricing Bucket Assets Liabilities 1 day $100,000…

A: Total assets within 12 months = Assets( 1 day +1 day to 3 months+ 3 to 6 months + 6 to 12…

Q: 1. A certain corporation listed their sales in 100s as 2400. What was their actual volume in…

A: Companies have different methods of expressing sales and each company has its own method of…

Q: Select all that are true with respect to a Price/Earnings (P/E) ratio. Group of answer choices Low…

A: Price/Earnings (P/E) ratio-This ratio helps to compare the price of a company's stock to the…

Q: Olmsted Inc. has $40 million in excess cash and no debt. The firm expects to generate additional…

A: Given:Annual free cash flow = $32 millionCost of capital = 10%Cash = $40 millionThe enterprise value…

Q: Given the folllowing liability portion of the balance sheet and the market value of equity of $100M,…

A: Accounts payables$20.00Accrued expenses$10.00Loans payable$40.00Short-term notes$50.00Other current…

Q: UANG Financials is quite certain that interest rates are going to decrease next month. How should…

A: To increase its equity value when interest rates are expected to decrease, a bank manager should…

Q: The following table shows your stock positions at the beginning of the year, the dividends that each…

A: CompanySharesBeginning of Year PriceDividend Per shareEnd of Year PriceUS…

Q: Determine the combined present value as of December 31, 2021, of the following four payments to be…

A: Present value is the same equivalent value today of the future cash flow to be received in future…

Concept explainers

Stock Market Indices

Stock indexes are used to compare the price fluctuations of a group of stocks of similar companies, which are combined based on a similar industry or a particular market capitalization limit or type of market. The price comparison is based on a pre-determined standard method or indicators. These stock indexes are usually considered a base for comparison of a particular stock, and the performance of that particular company can be easily determined.

Question

Question A

Full explain this question and text typing work only
We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line

'An investor makes a deposit today and earns an average continuous return (force of interest) of 6.5% over the next 4
years. What average continuous returnmust be earned over the subsequent 6 years in order to double the investment at the end of ten years?
Answer=
%.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Explanation of compound interest

VIEW

Step 2: Calculation of the average continuous return for the last 6 years

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
Assuming that you can invest to earn a stated annual rate of return of 12%, but where interest is compounded semi-annually. If you make consecutive semi-annual deposits of $500 each, with the first deposit being made today, how much will be your balance at the end of fifth year? a. $6,590.40 b. $440.59 c. $1,762.34 d. $881.17
Suppose that you have opened a saving account with an initial deposit of $10,000. The account offers an annual interest rate of 2.5% compounded quarterly. (c) What should be the annual interest rate so that the worth value of the investment reaches $15,000 in only 10 years?
Let y be the balance in an account if you deposit $5000 for x years at 4% APR compounded monthly. e) How much is the investment worth after 7 years? f) How fast is the investment growing after 7 years?
Assume that you can invest to earn a stated annual rate of return of 12 percent, but where interest is compounded semi-annually. If you make 20 consecutive semi-annual deposits of $500 each, with the first deposit being made today, what will your balance be at the end of Year 20? Group of answer choices $52,821.19 $57,900.83 $58,988.19 $62,527.47 $64,131.50
An investor deposits a sum of Rs 100,000 in an investment company with a promise of a rate of return of 18 percent per year. What will the sum amount be at the end of 5 years if the interest is added (i) monthly, and (ii) continuously.