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Consider a $1,000 investment at time zero. What is the future value of the investment if it is invested at 7.75% for 21 years? Repeat
- Consider a $1,000 investment at time zero.
- What is the future value of the investment if it is invested at 7.75% for 21 years?
- Repeat a under the assumption that interest is compounded daily (360 days per year).
- What is the future value of the investment if it is invested at 6.3% for 5 years, 8% for another 10 years, and then 10% for another 6 years?
- What is the geometric average return on the investment scenario in c above, also called the internal rate of return? Hint: Find the future value and then solve for the single rate that causes the present value to compound to the future value.
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