We use the formula:
A=P(1+r/2)^2n
where
A=future value
P=present value
r=rate of interest
n=time period.
A=1,000,000*(1+0.03/2)^(2*3)
=1,000,000*1.09344326
Hence future value factor=1.0934(Approx)
12. A firm has $1,000,000 to invest in a security that offers a 3% return compounded...
Investment A offers a 12% return compounded semiannually, and investment B offers a 11.69% return compounded continuously. Which investment has a higher rate of return over a 4-yr period? Investment B. Investment A.
17. A business worth $180,000 is expected to grow at 12% per year compounded annually for the next 4 years. (a) Find the expected future value. (b) If funds from the sale of the business today would be placed in an account yielding 8% compounded semiannually, what would be the minimum acceptable price for the business at this time? 18. A corporation worth $40 million is expected to grow at 8% per year compounded annually for 5 years. (a) Find...
You own a bond with a face value of $10 000. The bond offers a coupon rate of 3%, payable semi-annually, and the bond matures in exactly 12 years. Today, the yield on 12-year bonds is 4% compounded semi-annually. What would your bond be worth now on the secondary market? (Round to the nearest dollar). A. $10,545 B. $11,002 C. $15,008 D. $9,054
A financial security offers the security holders multiple payments as follows: $50 semi-annually for 10 years, with the first $50 to be paid a half year from now, and an additional single payment of $1,000 ten years from now. Assume the appropriate APR for this security is 8%, how much should this security sell today? Select one: a. $1135.90 b. $1188.26 c. $972.5 d. $1008.75
3. You want to buy a house by borrowing $300,000 at 3.85% over 30 years. What is the monthly payment and what is the final payment? 4. You invest $2000 in a CD at 2.1% a year for 2 years and 7 months, find the future value if interest is compounded (a) Monthly (b) Semi-annually (c) Quarterly (d) Annually
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The future value of a $10,000 annuity deposited at 12 percent compounded annually for each of next 5 years is: (Round to the nearest whole dollar) A. $40,376 B. $63,528 C. $71,154 D. $36,050 The future value of an ordinary annuity of $1,000 each year for 10 years, deposited at 3 percent, is: (Round to the nearest whole dollar) A. $8,530 B. $11,464 C. $11,808 D. $10,000 Peter will receive $1,200 at the beginning of each of the next...
12. Compound interest. You invest $1000 in an account that pays 5% compounded annually. What is the balance after two years? 13. Compounding using different periods. You invest $2000 in an account that pays an APR of 6%. a. What is the value of the investment after three years if interest is compounded yearly? Round your
You must invest $200000. Market interest rates are 6% APR
semi-annually compounded. What is the duration of this bond? Please
show formulas and do not use financial calculator or excel.
B. 3 years to maturity and 7% coupon rate (coupons paid semi-annually)
0 The Continental Bank advertises capital savings at 5.8% compounded semi-annually while TD Canada Trust offers premium savings at 5.7% compounded monthly. Suppose you have $3000 to invest for two years. (a) Which deposit will earn more interest? (b) What is the difference in the amount of interest? (a) The savings account will earn more interest (b) The difference is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as...