3, 9, 11

3. Compound Interest. Suppose that the value of an investment in the stock market has increased at an average compound rate of about 5% since 1900 . It is now 2020 . ( ( LO5-1) a. If your great-grandfather invested $1,000 in 1900 , how much would that investment be worth today? b. If an investment in 1900 has grown to $1 million, how much was invested in 1900 ? 9. Future Values. You invest $1,000 today and expect to sell your investment for $2,000 in 10 years. ( LO51 ) a. Is this a good deal if the interest rate is 6% ? b. What if the interest rate is 10% ? 10. Future Values. Your wealthy uncle established a $1,000 bank account for you when you were born. For the first eight years of your life, the interest rate earned on the account was 6%. Since then, rates have been only 4%. Now you are 21 years old and ready to cash in. How much is in your account? ( LO5-1) 11. Present Values. You can buy property today for $3 million and sell it in five years for $4 million. (You earn no rental income on the property.) ( LO5-2) a. If the interest rate is 8%, what is the present value of the sales price? b. Is the property investment attractive to you? c. Would your answer to part (b) change if you also could earn $200,000 per-year rent on the property? The rent is paid at the end of each year