At what rate of interest compounded annually will an investment double in five years? Find the answers by using (1) the exact formula and (2) the Rule of 72.
Q: Cindy is considering going to law school. If she does, she will spend $70,000 on tuition and books…
A: In economics, present value refers to the current value of a future stream of cash flow. Future…
Q: (Using Appendix A) How much will be in the bank account at the end of 15 years if $ 100 is invested…
A: Semi-annual interest rate (i) = 8% / 2 = 4% Number of semi-annual compounding periods (N) = 2 x 15 =…
Q: How much do you need to save each year for 30 years in order to have $775,000, assuming you are…
A:
Q: In one instance, a financial institution loaned you $60,000 for two years at an APR of 5.75% for…
A: First instance: Given , Principal = $60000 APR = 5.75% Time period = 2 years Thus, simple interest =…
Q: What is the present value of a $750 payment when interest is 6.75% in 2 years? $657.90…
A: we have interest in two years = 6.75% = 0.0675 we have formula for present value of the annuity as…
Q: What is the exact simple interest on $2,800 for the period from February 12 to july 6 of 1996, if…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: How much money must you invest today in order to withdraw ₱ 11,331 annually for 5 years if the…
A: Given the information: Annual withdrawal amount = 11331 Time = 5 years Interest rate = 1.98%
Q: If you borrowed P10000 from a bank with 18% interest per annum, what is the total amount to be…
A: Amount to be repaid = principle amount + interest payment
Q: For questions 3-4, consider the three sequences of incomes below ( P, Q, and R). Each sequence…
A: In economics, present value refers to the current value of a future stream of cash flows. Future…
Q: Mohamed wishes to deposit BD10,000 to a bank that will guarantee BD15,938.48 after eight (8) years.…
A: Here we need to assume the interest rate she is expecting from the bank. Then following calculation…
Q: In preparation for Sandara’s college education, her parents want to save ₱400,000 after 12 years.…
A: Given information, Future value (F)= ₱400,000 Interest rate (r)= 2% Compounding period (m)= 4…
Q: A company plans to place money in a new venture capital fund that currently returns 13.05% per year,…
A: The effective annual rate gives you the actual return as it reflects the actual annual return of the…
Q: Suppose Crystal Wilson wants to accumulate $1,000,000 by the time she retires in 40 years. If she…
A: Given, FV = $1,000,000 Time = 40 years Rate of interest = 10%
Q: Find the Present Value (today) of $144 to be received in two years at the interest rate of 15%.
A: Given information, Future value (FV): $144 Interest rate (r): 15% Time period (n): 2 years To…
Q: If the price of a one year T-Bill is $2,860 and the value at maturity is $3,000, what would be the…
A: Yield to maturity is given as = (Face value/current value)1/years to maturity - 1 Face value= $3000…
Q: 10. Suppose the interest rate is 5% and that you are to receive three annual payments of $10,000,…
A: The present value is an important financial concept popularly used by business firms and individuals…
Q: At the beginning of every three months, a college student deposits $3,000 in a fund that gives 2%…
A: Depositing every three months till 48 months at the beginning forms the annuity series or annuity…
Q: You can invest in an account that pays simple interest or an account that pays compound interest. In…
A: We need to solve the simple interest amount as well as compounding interest amount with given…
Q: Greg wants to have $50 000 in five years. He has $20 000 today to invest. The bank is offering five-…
A: Given Greg wants to have $50,000 in five years. Principal amount = $20,000 Interest rate…
Q: Define each of the following loan terms, and explain how they are related to one another: the prime…
A: Loan: It refers to the money that people takes from banks or from friends and relatives. The more…
Q: First City Bank pays 9 percent simple interest on its savings account balances, whereas Second City…
A: Money is a commodity accepted by general consent as a medium of economic exchange. Here, we…
Q: You are going to invest $1,500 today in a fund today. After 10 years, you want to have exactly…
A: Principal = $1,500 Time =10 years Amount =$2,500 or Principal1+R10010=2500or 15001+R10010=2500or…
Q: What are the two types of interest rates used in equivalence calculations?
A: Equivalence calculation is the calculation of interest rate received for an investment at the end of…
Q: Consider the compound interest equation B(t) = 100(1.1664)'. Assume that n = 2, and rewrite B(t) in…
A: Answer -
Q: earns an annual interest rate of 2.75%.
A:
Q: What is the yield to maturity (YTM) on a simple loan for $1,000 that requires a repayment of $2,000…
A: Here we calculate the yield to Maturity by using the future amount repaid so the calculation of the…
Q: An investment promises to pay into an account that pays you 6 percent annually, $150 per month for…
A: $150 per month. Therefore for one year 150*12=$1800.
Q: How much must be deposited at the end of each year into an account that earns 4.0 percent interest…
A: Given information, Future value (F): $80,000 Interest rate (i): 4% Time period (N): 6 years To…
Q: How many years will it take to triple your investment of $5,000 if it has an interest rate of 10%…
A: Information given to us is:- Investment = $5000 Interest rate = 10% compounded annually We have to…
Q: Roy wishes to have P 1,000,000 in a certain fund at the end of 5 years. How much should he invest in…
A: Future value (F)= 1,000,000 Time = 5 year r = 0.22 P = Initial investment
Q: QUESTION 6 What is the net present value of receiving $250 in 5 years from now if the interest rate…
A: Present value is the current worth of a future sum of money given a specified rate of return.
Q: Define the term Yield to Maturity?
A: Yield to maturity (YTM) is a rate of return of a bond or debenture if it held till its maturity date…
Q: Assume that a 24-month CD purchased for $3000 pays an APY of 4.25% (and of course interest is…
A: I have assumed that it is compounded monthly. number of compounding periods: nlength of time: 2 (…
Q: Find that how much must be invested at the end of every year at 11% so that $15,000 will be…
A: Given: Future Value (F.V.) = $15,000 Annual interest rate (r) = 11% = 0.11% Time in years = 5 years…
Q: The rule of 72s states that the number of years for an investment to double is approximately 72…
A: In economics, rule 72 is a way to determine how many years will take an investment to double its…
Q: If a lender makes a simple loan of $400 for 3 years and charges 5%, then the amount that the lender…
A: 1) Principal=P=$400years=n=3interest=r=5%Interest after 3 years=P×n×rInterest after 3…
Q: What rate of interest (in %) compounded quarterly will yield an effective interest rate of 4.4%?…
A: Let x% be the rate of interest compounded quarterly Effective interest rate = 4.4% We have to find…
Q: If a financial asset that is valued at $18,455 in the Stock Market today would be worth $39,200 in 2…
A: The interest rate is counted as a compounding interest rate in the market as the market money can be…
Q: Determine the principal P that must be invested at rate r = 3 1 2%, compounded monthly, so that…
A: Given that, A = $500,000 Rate of interest (r) = 3×1/2% = 7/2% = 0.035 Time period (t) = 17…
Q: In both of the simple and compound interest cases a higher rate means the borrower pays more. true…
A: When an individual borrows money from another individual or financial institutions, he has to pay…
Q: You deposit $ 9,030 in an account that pays 3 % simple interest. How much do you have after 4…
A: Simple interest: Interest is a quick and easy technique of calculating the interest charge on a…
Q: Which Interest rate is better to use the simple interest or compounded interest plan, explain your…
A: The interest rate is the amount charged on the principal by the borrower to the borrower to use the…
Q: Rafael invested $2,000 in a business that yields an annual interest rate of 10% compounded…
A: Continuous compounding formula: P(t) = Pert Where P(t) is valued at time t P is invested money (or…
Q: What is the yield to maturity on a simple loan for $5 million that requires a repayment of $9…
A: Yield to maturity is close to the current yield in that it divides annual cash inflows from a bond…
Q: You want to save the down payment required to purchase a vacation home at the end of five years. If…
A: Given: Down payment=$25000 Interest rate=5% To find: Amount to be set aside at the end of each year…
Q: A man borrowed P75,000+15 on September 18, 1898, and promised to pay on May 17, 1904, at a simple…
A: Interest refers to the amount paid in excess of the principal amount by the borrower to the lender.…
Q: Johnson invested his money to a corporation and he required them 2.09 times the amount for a certain…
A: *answer:
Q: Calculate the current yield on a bond that has an annual interest payment of $200 and a resale price…
A: Bond: It is an instrument of indebtedness of the bond issuer to the bondholder.
Q: f you obtain a loan of ₱1M at the rate of 12% compounded quarterly in order to build a house, how…
A: Loan Amount = 1000000 Interest Rate= 12% N=10 Years Equal Payment Series =?
Q: invest today in order to withdraw ₱ 14,766 annually for6 years if the interest rate is 2.24% if…
A: *Answer: Given information, Annual amount (A): ₱ 14766 Time period (N): 6 years Interest rate…
At what rate of interest compounded annually will an investment double in five years? Find the answers by using (1) the exact formula and (2) the Rule of 72.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Calculate the present value of a $1,300 discount bondwith seven years to maturity if the yield to maturity is 8%.Consider a $1200 bond that makes $30 annual coupon payments. If the interest rate is 2 percent and the bond matures in two years, what is the bond's present value? Carefully follow all mathematical instructions. Round intermediate steps to four decimal places and your final answer to two decimal places.Making the assumption of no compounding interest , suppose you purchase a perpetuity bond from CosoNostra Pizza Inc. for $ 4,000 with an annual coupon rate of 3 % . Specify all answers to the nearest dollar , and assume a discount rate equal to that of the current interest rate . Changes in the economy push interest rates up from 3 % to 5 % . For how much can you sell your bond following this change in market interest rates ?
- Define the term Yield to Maturity?Now that young King Solomon has inherited the kingdom of Israel, and a massive amount of wealth that he can invest, he wants to plan for his "retirement." Since he doesn't know how long he'll live, and data on life expectancy is scarce, he reasons that he just wants a regular "cash flow" over the course of his life. With that in mind, how many shekels would he need to deposit at 20 percent interest compounded every year in order to be able to withdraw 50 shekels at the end of every year for seventy years?An investment promises to pay into an account that pays you 6 percent annually, $150 per month for the next twenty-two years. Suppose the first deposit into the account is made one month from today what is the value of the amount which will be in the account at the end of thirty years? Rounded to 2 decimal places. (Answer up to 2 decimal places)
- If the price of a one year T-Bill is $2,860 and the value at maturity is $3,000, what would be the yield(interest rate)?A lottery claims its grand prize is $20 million, payable over four years at $4,000,000 per year. If the first payment is made immediately, and the next 4 payments at the end of year 1, year 2, year 3 and year 4, what is this grand prize really worth? Use an interest rate of 8%.What uniform annual payment for 30 years is equivalent to spending $10,000 immediately, $10,000 at the end of 10 years, $10,000 at the end of 20 years, and $2,000 a year for 30 years? Assume an interest rate of 8%.
- f a coupon bond has two years to maturity, a coupon rate of 8%, a par value of $1000, and a yield to maturity of 12%, then the coupon bond will sell for $ ? (Round your response to the nearest two decimal place) What will the coupon bond sell for?A bond with a face value of $1,000 has 8 years until maturity, has a coupon rate of 8%, and sells for $1,100. What is the yield to maturity if interest is paid once a year? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places. What is the yield to maturity if interest is paid semiannually? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.Assume that your rich aunt has given you $25,000 in a gift. You have come up with three ways to spend (or invest) the capital. First, you want (but do not need) a new car to make your home and social life brighter. Second, you can invest the money in the common stock of a high-tech company. Price is expected to grow by 20 percent a year, but this option is very risky. Third, you can put the money into a three-year deposit certificate with a local bank and receive 6 percent annually. The third alternative carries little risk. a. If you plan to buy the new vehicle, what is the cost of that option for the opportunity? Explain what you think in your own words.b. If you invest in the popular high-tech stock, what is the cost of that option for the opportunity? Explain what you think in your own words.
