Question

10. 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 of $10,000 will be worth $14,693 five years in the future, assuming that no additional deposits or withdrawals are made, what is the Implied interest rate the investor will earn on the security? O 4.80% O 6.00% O 6.40% O 8.00% for this investment to grow to a If an investment of $50,000 is earning an interest rage of 12.00% compounded annually, it will take value of $70,246.40-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? An investment of $50 at an annual rate of 5% will return a higher value in five years than $25 invested at an annual rate of 10% in the same time. O An investment of $25 at an annual rate of 10% will return a higher value in five years than $50 invested at an annual rate of 5% in the same time.

Answer 1

1-	rate of interest =Using rate function in MS excel	rate(nper,pmt,pv,fv,type) nper =5 pmt =0 pv = -10000 fv =14693 type =0	RATE(5,0,-10000,14693,0)	8.00%
2-	Time to grow =Using nper function in MS excel	nper(rate,pmt,pv,fv,type) nper = 12% pmt =0 pv =-50000 fv =70246.4 type =0		3.0
3-	future value of Investment	pv*(1+r)^n	50*1.05^5	63.81407813
	future value of Investment	pv*(1+r)^n	25*1.1^5	40.26275
	option 1 is correct as Investment of 50 @5% for 5 years period will provide value of 63.81 while Investment of 25@10% for 5 years will reuslts in 40.26 so statement 1 is correct

AutoSave Off H book 1 - Excel Sign in X File Home Insert Page Layout Formulas Data Review View Help O Search Share Comments X Calibri 11AA = ab ca Wrap Text CIT AT IT אלדד 280 5 TA Percentage $ %) 8-98 WÉ Paste BIU Hv Ideas А. Insert Delete Format + Merge & Center Conditional Format as Cell Formatting Table Styles Styles Sort & Find & Filter Select Clipboard Font Alignment Number Cells Editing Ideas H1849 X =RATE(5,0,-10000, 14693,0) с D E F G H I I J K L м N o P Q 1848 1849) 1850 1- rate of interest rate(nper,pmt,RATE(5,0, 8.00% 1 1851 12- Time to grow = nper(rate,pmt,pv,fv, type) 3.01 I 1852 1853 1854 13- future value of pv*(1+r)^n future value of pv*(1+r)^n 50*1.0545 25*1.145 63.81407813! 40.26275 1 1855 option 1 is correct as Investment of 50 @5% for 5 years period will provide value of 63.81 while Investment of 25@10% for 5 years will reusits in 40.26 so statement 1 is correct 1856 1857 1858 1859 1860 1861 1862 1863 1864 1865 1866 1867 1868 1869 1070 Sheet1 Sheet2 # Select destination and press ENTER or choose Paste B + 100% H X N P W O T 10:11 AM 9/22/2020