Q Search this Ey- Time value of money c. Find the PV of $1,000 due in 6 years if the discount rate is 12%. Round your answer to the nearest cent. 24 d. A security has a cost of $1,000 and will return $2,000 after 6 years. What rate of return does the security provide? Round your answer to two decimal places. % e. Suppose California's population is 34.3 million people, and its population is expected to grow by 3% annually. How long will it take for the population to double? Round your answer to the nearest whole number. years
Q Search this Ey- Time value of money c. Find the PV of $1,000 due in 6 years if the discount rate is 12%. Round your answer to the nearest cent. 24 d. A security has a cost of $1,000 and will return $2,000 after 6 years. What rate of return does the security provide? Round your answer to two decimal places. % e. Suppose California's population is 34.3 million people, and its population is expected to grow by 3% annually. How long will it take for the population to double? Round your answer to the nearest whole number. years
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter2: Using Financial Statements And Budgets
Section: Chapter Questions
Problem 6FPE
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Transcribed Image Text:Q Search this
Ey- Time value of money
c. Find the PV of $1,000 due in 6 years if the discount rate is 12%. Round your answer to the nearest cent.
24
d. A security has a cost of $1,000 and will return $2,000 after 6 years. What rate of return does the security provide? Round your answer to two decimal places.
%
e. Suppose California's population is 34.3 million people, and its population is expected to grow by 3% annually. How long will it take for the population to double? Round your answer
to the nearest whole number.
years
f. Find the PV of an ordinary annuity that pays $1,000 each of the next 6 years if the interest rate is 18%. Then find the FV of that same annuity. Round your answers to the nearest
cent.
PV of ordinary annuity: $
FV of ordinary annuity: $
g. How will the PV and FV of the annuity in part f change if it is an annuity due rather than an ordinary annuity? Round your answers to the nearest cent.
PV of annuity due: $
FV of annuity due: $
h. What will the FV and the PV for parts a and c be if the interest rate is 12% with semiannual compounding rather than 12% with annual compounding? Round your answers to the
nearest cent.
FV with semiannual compounding: $
PV with semiannual compounding: $
I. Find the annual payments for an ordinary annuity and an annuity due for 12 years with a PV of $1,000 and an interest rate of 10%. Round your answers to the nearest cent.
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Transcribed Image Text:ne value of money
h. What will the FV and the PV for parts a and c be if the interest rate is 12% with semiannual compounding rather than 12% with annual compounding? Round your answers
nearest cent.
FV with semiannual compounding: $
PV with semiannual compounding: $
I. Find the annual payments for an ordinary annuity and an annuity due for 12 years with a PV of $1,000 and an interest rate of 10%. Round your answers to the nearest cent
Annual payment for ordinary annuity: $
Annual payment for annuity due:
%24
j. Find the PV and the FV of an investment that makes the following end-of-year payments. The interest rate is 10%.
Year
Payment
$200
2
$300
3
$500
Round your answers to the nearest cent.
PV of investment: $
FV of investment: $
k. Five banks offer nominal rates of 9% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. Assume 365 days in
1. What effective annual rate does each bank pay? If you deposit $6,000 in each bank today, how much will you have in each bank at the end of 1 year? 2 years? Round your
answers to two decimal places.
B
D
EAR
9.00 %
9.20 %
9.31 %
9.38 %
9.42 %
FV after 1 year
%24
6,540.00
6,552.15
6,558.50
%24
6,562.84
%$4
6,564.97
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