Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please anwer ASAP Which of the following is not one of these variables? The interest rate (r) that could be earned by invested funds The

please anwer ASAP
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Which of the following is not one of these variables? The interest rate (r) that could be earned by invested funds The duration of the investment (n) The present value (PV) of the amount invested The Inflation rate Indicating the change in average prices All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest earned during the deposit or Investment period. Each Ine on the following graph corresponds to an interest est rate: 0%, 8% or 17% identity the interest rate that corresponds with eachine 20000 15000 DOLLARS (PV) 10000 B 5000 1 2 + 3 4 6 7 TIME (periods) 8 10 Line A corresponds to while Une B is consistent with Line C corresponds to Investments and loans base their interest calculations on one of two possible methods: the interest and the Interest methods. Both methods apply three variables-the amount of principal, the interest rate, and the investment or deposit period-to the amount deposited or invested in order to compute the amount of interest. However, the two methods differ in their relationship between the variables ssignment: Chapter 04 Time Value of Money search this ca ssume that the variables, n, and PV represent the interest rate, investment or deposit period, and present value of the amount deposited or vested, respectively Which equation best represents the calculation of a future value (FV) using simple interest? OFV = PV XIXn O FV = PV x (PV XIX n) OFV = PV + (PV XTX n) OFV PV XXN Which equation best represents the calculation of a future value (FV) using compound Interest? O FV = PV O FV =( PV O FV = PV + (PV XT Xn) O FV = PV X (1+1)" Q Search this course Assignment: Chapter 04 Time Value of Money Identify whether the following statements about the simple and compound interest methods are true or false X is After the end of the second year and all other factors remaining equal, a future value based on compound interest will never exceed the future value based on simple interest True False Jero Sinc A-Z The process of earning simple interest does not allow a depositor or investor to earn interest on any previously came interest. All other factors being equal, when interest is paid annually, both the simple interest and the compound interest methods will accrue the same amount of earned interest by the end of the first year, 6 oft with Felix is willing to invest $35,000 for two years, and is an economically rational investor. He has identined three investment alternatives (A, B, and C) that vary in their method of calculating interest and in the annual interest rate offered. (beca end Gend Since he can only make one investment during the two-year investment period, complete the following table and indicate whether Felix should invest in each of the investments Note: When calculating each Investment's future value, assume that all interest is compounded annually. The final value should be rounded to the nearest whole dollar Interest rate and Method Expected future Value Make this investment? 8% simple interest Investment nese O B 3% compound interest 5% compound interest

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

U.S. Mergers And Acquisitions Legal And Financial Aspects

Authors: Felix Lessambo

1st Edition

3030857344,3030857352

More Books

Students also viewed these Finance questions