Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Investments in the Stock Market have increased at an average compound rate of about 5% since 1900. It is now 2013. a) If you invested

image text in transcribed

Investments in the Stock Market have increased at an average compound rate of about 5% since 1900. It is now 2013. a) If you invested $1,000 in the stock market in 1900, how much would that investment be worth today? b) If your investment in 1900 has grown to $1,000,000, how much did you invest in 1900? What is the present value of the following cash flow stream if the interest rate is 6%? Year 1 - $200, Year 2 - $400, and Year 3-$300. Find the interest rate implied by the following combinations of present and future values? a) PV = $400, Years = 11, FV = $684 b) PV = $183, Years = 4, FV = $249 How long will it take for $400 to grow to $1,000 at 8% interest rate? Would you rather receive $1,000 a year for 10 years or $800 a year for 15 years if the interest rate is 5%? What if the interest rate is 20%? Show calculations to demonstrate your answer. A property will provide $10,000 per year forever. If its value is $125,000, what must be the discount rate? What is the present value of a 3-year annuity of $100 if the discount rate is 6%? A financial analyst was earning $6,000 per year in 1950. Today, that same job pays $60,000 a year. However, on average, goods today cost 8.8 times what they did in 1950. What is the real income today in terms of constant 1950 dollars. In April 2013, a pound of apples cost $1.41. Four years earlier, a pound of apples cost $1.20 per pound. What was the annual compound rate of growth in the price of apples.In In the summer of 2007, Zimbabwe's official inflation rate was 110% per month. What was the annual inflation rate

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

Fundamentals of Futures and Options Markets

Authors: John C. Hull

8th edition

978-1292155036, 1292155035, 132993341, 978-0132993340

More Books

Students also viewed these Finance questions