Question

An investment in a lease offers returns of $2900 per month due at the beginning of each month for three years. What investment is compounded semi-annually? tied the returns are deferred for two years and the interest required is 45 An investment of is justified Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed)

Answer 1

Returns are offered 2900 at the beginning of each month N (number of payments) = 12*3 = 36 Interest rate 4% compounded semiannually (1+0.04/2)^2-1 effective annual rate= 0.0404 = 4.04% Monthly rate of return = 4.04/12 0.336667 Use financial calculator to find the present value of the investement, (set your calculator at Beginning, because payments are made at the beginning) present value comes out to be $98496.54031 Now, if the returns are being differed for two years, then the investment justified would be 98496.54031/(1.0404)^2 90995.5782448