Question
Assume annual compound interest unless stated otherwise. 1. If the interest rate is 4%, what are the proceeds of a $5,000 investment after 10 years?
Assume annual compound interest unless stated otherwise.
1. If the interest rate is 4%, what are the proceeds of a $5,000 investment after 10 years?
a) assuming simple interest
b) assuming compound interest
2. What if interest in #1 is compounded semi-annually? What if monthly?
3. How much do you need to deposit into a bank in order to receive proceeds of $200,000 in 5 years if the interest rate is 2.5%
What if interest is compounded quarterly?
4. What is the present value of $200,000 to be received in 5 years if the rate of discount is 2.5%?
5. What is the price today of a $200,000 cash flow in 5 years if the discount rate is 2.5%
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