Homework Answers
Present value = Future value/(1+i)^n
i = interest rate per period
n= number of periods
Present value of 815 = 815/(1+0.04)
= 783.65
Since present value of 815 is more than 770,
choose B) 815 one year from today
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D. There is not enough information to determine when we 6. You are offered a choice...
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4
Given a choice of two investments, would you choose one that pays a total return of 30 percent over five years or one that pays 0.5 percent per month for five years? What annual rate of return does each give you? Instructions: Enter your responses in percentages to the nearest hundredth, for example, 3.00 for 3 percent. The return of 30 percent over 5 years provides an annual return of percent. The return of 0.5 percent per month for...
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Retirement Investment Advisors, Inc., has just offered you an annual interest rate of 4.2 percent until you retire in 40 years. You believe that interest rates will increase over the next year and you would be offered 4.8 percent per year one year from today. If you plan to deposit $12,000 into the account either this year or next year, how much more will you have when you retire if you wait one year to make your deposit? Multiple Choice...
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4
Given a choice of two investments, would you choose one that pays a total return of 30 percent over five years or one that pays 0.5 percent per month for five years? What annual rate of return does each give you? Instructions: Enter your responses in percentages to the nearest hundredth, for example, 3.00 for 3 percent. The return of 30 percent over 5 years provides an annual return of percent. The return of 0.5 percent per month for...
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