Question

Problem 4-35 Solving for Rates (LG4-7) 25 You invested $2,000 in the stock market one year ago. Today, the investment is valued at $1700 points What return did you earn? (Negative answer should be indicated by a minus sign) Bock Retur eamed Berences What return would you need to get next year to break even overall? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Retum eamed

Answer 1

Answer 4-35(a):

Working:

Return earned = (1700 -2000) / 1700 = -15.00%

Answer 4-35(b):

Working:

Return required next year to break-even = (2000 - 1700) / 1700 = 17.65%

Answer 4-32:

Working:

PV = $2000

FV = $4400

Interest = 11%

Hence =NPER (rate, pmt, pv, fv, type) = NPER(11%, 0, -2000, 4400, 0) = 7.555167 Years

Period required is 7 years and (0.555167 * 12 =) 6.7 Months

Answer 5-7:

Working:

PMT = $830

N = 6 years

Interest rate = 10%

Present value = PV(rate, nper, pmt, fv, type) =PV (10%, 6, -830, 0, 0) = $3,614.87

Answer 5-15:

Working:

EAR = (1 + 12.50% / 12) ¹² - 1 = 13.24%

As HOMEWORKLIB's policy, I have answered 4 parts