Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Help please 1) Suppose you invest $10000 into a mutual fund that is expected to earn a rate of return of 5%. How money will

Help please

1) Suppose you invest $10000 into a mutual fund that is expected to earn a rate of return of 5%. How money will you have in 10 years? .Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."

2) If $5000 is invested in a certain business at the start of the year, the investor will receive $1100 at the end of each of the next 10 years. What is the present value of this business opportunity if the interest rate is 5% per year?Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."

3)"Joe just inherited the family business, and having no desire to run the family business, he has decided to sell it to an entrepreneur. In exchange for the family business, Joe has been offered an immediate payment of $100000. Joe will also receive payments of $8000 in one year, $5000 in two years, and $2000 in three years. The current market rate of interest for Joe is 5%. In terms of present value (PV), how much will Joe receive for selling the family business?Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer.

4)"A perpetuity has a PV of $1000. If the interest rate is 9%, how much will the perpetuity pay every year? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."

5)Ally wishes to leave a provision in her will that $2500 will be paid annually in perpetuity to a local charity. How much must she provide in her will for this perpetuity if the interest rate is 15%?Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."

6) If the current rate of interest is 15%, then the present value (PV) of an investment that pays $1000 per year and lasts 10 years is closest to ________.Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer."

7)A rich donor gives a hospital $50000 one year from today. Each year after that, the hospital will receive a payment 1.5% larger than the previous payment, with the last payment occurring in 5 years' time. What is the present value (PV) of this donation, given that the interest rate is 2.5%? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer."

8)"Assume that you are 15 years old today, and that you are planning on retirement at age 65. Your current salary is $50000 and you expect your salary to increase at a rate of 4% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be made on your 16st birthday and will be 15% of this year's salary. You expect to deposit 15% of your salary each year until you reach age 65. Assume that the rate of interest is 2%.The present value (PV) (at age 15) of your retirement savings is ________.Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."

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

Step: 3

blur-text-image

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

Options Futures and Other Derivatives

Authors: John C. Hull

10th edition

013447208X, 978-0134472089

More Books

Students also viewed these Finance questions