Question
Answer all of the following: A. Assume that you have $7500 to invest. You plan to invest it for 10 years at a rate of
Answer all of the following:
A. Assume that you have $7500 to invest. You plan to invest it for 10 years at a rate of 7% per year, compounded semiannually. What is the future value (FV) of this investment?
B. Assume that you need to accumulate $25,000 by the end of 17 years. You can invest today at a rate of 12% per year, compounded quarterly. At that rate, how much must you invest today (PV) to accumulate the $25,000?
C. Assume that you have $5000 to invest today. At the end of 7 years, you need that $5000 to have grown to $10,000. If you invest at semiannual compounding, what annual rate must you earn?
D. You have invested $5000 at 6% per year, compounded quarterly. How many years will it take for your $5000 to grow to $15,000? Be sure to state your answer in years.
E. You are considering investing in a regular (deferred) annuity. The annuity payments are $500 semiannually for 20 years. If the discount rate (required rate of return) is 8% per year, compounded semiannually, what is the present value (PV) of this annuity?
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