Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A. Future Value: How will $100 in deposit grow at 10% over 3 years? B. Present Value: How much money we need to deposit to

A. Future Value: How will $100 in deposit grow at 10% over 3 years?

B. Present Value: How much money we need to deposit to have $100 after 3 years at 10% interest rate?

C. Future Value of Annuity: You want to start a business in 3 years. If you save $1000 at the end of each year, how much will you have after 3years? (Assume i=10%.)

D. Present Value of Annuity: What is the market value for an account that has $1,000 deposit per year for 3 years? (Assume the deposit is at the end of each year and i=10%)

F. Perpetuities: What is the Present Value of $1,000 forever? (Interest rate =10%)

G. You are looking at an investment that will pay $1200 in 5 years if you invest $1000 today. What is the implied rate of interest?

H. Benjamin Franklin died on April 17, 1790. In his will, he gave 1,000 pounds sterling to Massachusetts and the city of Boston. He gave a like amount to Pennsylvania and the city of Philadelphia. Franklin originally specified that the money should be paid out 100 years after his death and used to train young people. Later, it was agreed that the money would be paid out 200 years after Franklins death in 1990. By that time, the Pennsylvania bequest had grown to about $2 million; the Massachusetts bequest had grown to $4.5 million. Assuming that 1,000 pounds sterling was equivalent to 1,000 dollars, what rate did the two states earn? (Note: the dollar didnt become the official U.S. currency until 1792.)

**Please show work clearly**

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Ages Of The Investor A Critical Look At Life Cycle Investing

Authors: William J Bernstein

1st Edition

1478227133, 978-1478227137

More Books

Students also viewed these Finance questions

Question

Describe how to measure the quality of work life.

Answered: 1 week ago

Question

What attracts you about this role?

Answered: 1 week ago