Question
i got the answers for question 1 to 8 but can't figuer out from 9 to 22 please help 1. You invest $8,000 in a
i got the answers for question 1 to 8 but can't figuer out from 9 to 22 please help
1. You invest $8,000 in a savings account, the interest rate is 12% per year and the length of time is 15 years. Compounding is monthly. What is the value of the savings account at the end of ten years?
2. What would be the answer if compounding is every six months?
3. How many periods does it take for money to double if the interest rate is 12% per period?
4. If the interest rate is 12% and compounding is monthly, how long does it take for your money to triple?
5. What is the interest rate if Fif = 1,000, PV = 600, and t = 50 periods?
6. What is the annual rate (APR) if compounding is monthly, and the interest rate is 4%.
7. Let there be two compounding periods per year. Let the APR be 10%. What is the EAR'?
8. What is EAR if APR = 6% and compounding is monthly?
9. Consider an annuity. What is the payment amount per month if PV A 000, r = 6%, and for five years?
10. Will C go up or down if be if r increases?
11. You believe that you will need 8800,000 by the time you retire in 40 years. Assume an interest rate of 6% per year. How much will you need to contribute to your IRA (individual retirement account) each year?
12. Given the above facts, how much would you have to contribute if you assumed that the interest rate will be 9.7%?
13. What is the value of the bond if the bond is 6% bond, ten year bond, and the YTM is 8%? As in most bonds, coupons are paid semiannually.
14. What is the coupon of the bond. There is ten years outstanding on the bond, the pricing of the bond is $1,050, and the YT M is 8%? As in most bonds, coupons are paid semiannually.
15. What is the yield to maturity of the bond? There are five years outstanding on the bond, the pricing of the bond is $1,050, and the coupon is 6%? As in most bonds, coupons are paid semiannually.
16. Assume a project costs $5,000, and has cash flows of $2, 000 at the end of period 1, $2,000 at the end of period 2, and $3, 000 at the end of period 3, What is the payback?
17. Assume the same facts as above, but now assume that the discount rate is 14%.
18. Assume the same facts as above, what is the IRR of the project?
19. If the inflation rate is 5%, and the real rate is 3%, what is the nominal rate on the instrument?
20. What is the NPV profile, and what information does it provide to you?
21. Why is .NPV a better measure than IRR?
22. Under what circumstances does the IRR have multiple solutions? Why?
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