Answered step by step
Verified Expert Solution
Question
1 Approved Answer
yes you can All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest earned
yes you can
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 line on the following graph corresponds to an interest rate: 0%, 8%, or 16%. Identify the interest rate that corresponds with each line. VALUE Dollars VIN Line A: Line B: Line C: _ 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. Assume that the variables I, N, and PV represent the interest rate, investment or deposit period, and present value of the amount deposited or invested, respectively. Which equation best represents the calculation of a future value (FV) using: Compound interest? PV - PV / (1 + 1)N PV = PV x (1 + 1)N OFV = (1 + I)N/PV Nicholal is willing to invest $30,000 for six years, and is an economically rational Investor. He has identified three investment alternatives (A, B, and c) that vary in their method of calculating interest and in the annual interest rate offered. Since he can only make one investment during the six-year Investment period, complete the following table and indicate whether Nicholai should invest in each of the investments. Note: When calculating each investment's future value, assume that all interest is earned annually. The final value should be rounded to the nearest whole dollar. Investment Expected Future Value Make this investment? Interest Rate and Method 8% simple interest 3% compound interest 5% compound interest lalala 4. Finding the interest rate and the number of years The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations. If a security currently worth $2,000 will be worth $3,524.68 five years in the future, what is the implied interest rate the investor will earn on the security-assuming that no additional deposits or withdrawals are made? 12.00% 1.76% 5.67% 0.35% for this investment to If an investment of $40,000 is earning an interest rate of 8.00%, compounded annually, then it will take reach a value of $56,554.46-assuming that no additional deposits or withdrawals are made during this time. Which of the following statements is true-assuming that no additional deposits or withdrawals are made? If you invest $1 today at 15% annual compound interest for 82.3753 years, you'll end up with $100,000 If you invest $5 today at 15% annual compound interest for 82.3753 years, you'll end up with $100,000Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started