Which of the following statements is true? 01. The more compounding periods per year, the less the future value will be O2. The future value of an investment increases with higher interest rates O 3. Assuming interest rates are positive, the present value will always be larger than the future value 4. Fred
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- You ́re considering an investment that you expect will produce an 9% return next year, and you expect that your real rate of return on this investment will be 4%. What do you expect inflation to be next year?8. If the concern is for the value that existing money will have next year, the formula for the intertemporal value of money can be expressed as follows: Next Year's Value = Present Value (1 + r). For example, if the interest rate is 10% and the present value is $100, the $100 will increase to $110 at the end of a year. a. Using this algebraic expression, show the formula for the present value of future income and calculate what $200 received next year is worth now. b. What is the present value of $100 received 2 years from now?Suppose that you have an investment that earns 0% in the first year, but 20.7% in the second year. What rate of interest, compounded annually, would yield the same return after two years? (Answer in percentage)
- which of the following statements are correct given a constant interest rate and constant giver year period of time? 1) An increase in the future values causes the present value to declines 2) An increase in the future value cause the present value to increase 3) There is inverse relationship between the present value and future value 4) There is a direct relationship between the present value and the future value a) 2 and 3 only b) 2 and 4 only c) 1 and 3 only d) 1 and 4 only e) 1 onlyChevron-Phillips requires a real return of 14.2%. If inflation is running 3.8%, what must be their MARR or “hurdle rate” on capital investments when using then-current dollars in analyses?An investor wants to be able to buy 4 percent more goods and services in the future in order to induce her to invest today. During the investment period prices are expected to rise by 2 percent. Which statement (s) below is true ? i 4 percent is the desired real risk free interest rate. ii. 6 prevéis the approximate nominal rate of interest required. iii. 2 percent is the expected inflation rate over the period I. only ? I I only ? iii only ? i and ii only ?
- (3) Today you have paid $275 for an investment that pays $100 in one year, $500 in two years,and $X in 4 years. Assuming the market interest rate is 100% and the net present value of theinvestment is zero, what must be true about X?(a) X is greater than $2,500(b) X is greater than or equal to $2,000 but less than $2,500(c) X is greater than or equal to $1,500 but less than $2,000(d) X is greater than $1,200 but less than $1,500(e) X is less than or equal to $1,200Suppose the real rate on your investment is 9.5 percent and the inflation rate is 2.6 percent. What nominal rate would you expect to see on your investment? Use the Fisher Effect Formula.a) You invest 155 000 TL for a year. At the end the year, you have 174 375 TL net in your account. If the inflation realizes at %10 fot this year, calculate real rate of return? Can real interest rates be negative? Give a simple example?
- The ordered pairs (0 , 5000) and (10 , 13591.41) represent the value of an investment at two different times: When the investment was made, and 10 years later. Let f(t), where t is time in years, be the linear function so that the above points lie on its graph. Then, using f(t), the value of the investment after 12 years is R_______ 1. Fill in the blank, If the interest rate for the investment is 10% per annum, compounded continuously, then the absolute error in approximating the value of the investment after 12 years with f(t) is R____ Fill in the blankYou are required to find how long it will take a sum of money (or anything else) to grow to some specified amount with a certain compound interest rate. Specifically, if a company’s investment has a real rate of return of 4% per year and the inflation rate is 6% per year, approximately how long will it take for the investment to triple?What is the (exact) nominal return on an investment that earns a real return of 14.7% while inflation is 7.4%? Enter your response, in percent (%), correct to TWO decimal places.