1.A company has purchased an asset for $165,461. If they require a return of 11.38%, how much must they sell the asset for in 8 years?(Round to 2 decimal places.)
2.Suppose that 2 years ago you bought an old record player at a yard sale for $4. You saw today on E-bay that the same record player is selling for $72. If you were to sell the record play at that price today, what would be the implied return percentage? (Convert to a percent. Round to 2 decimal places.
3.An investment will pay $17,747 in 16 years. If the interest rate is 13.8%, how much is it worth today? (Round to 2 decimal places.)
4.If you have $462 today and you think you can earn an interest rate of 6% per year, how many years until you have $844?
5.An investment will pay you $3,096 in 1 years if you pay $1,980 today. What is the implied rate of return? (Convert to a decimale. Round to 2 decimal places.)
6.In 1998, the average price of a gallon of gas was $1.09. Today, the average price of a gallon of gas is $2.84. At what annual rate has a gallon of gas increased over the last 20 years? (Answer as a percent. Enter only numbers and decimals in your response. Round to 2 decimal places.)
7.Your goal is to have $76,023. If you can earn 11.9% per year and you invest $18,064 today, how many years until you reach your goal?
8.You are buying an investment property for $383,240 today. Through research, you have determined that the value of the property is likely to grow at a rate of 7.17% per year, on average. How long until the value of the property grows to $521,360?
9.Calculate the value of the cash flows at time 6. The interest rate is 11.99%.
0 | 1 | 2 |
$1,135 | $2,375 | $3,065 |
10.You are looking at an investment that will pay you $25,919 in year 2, $42,812 in year 4 and $45,841 in year 6. If your required return is 8.34%, what is the most you should pay for the investment? (In other words, how much is the project worth today?)
1 | Assets cost = $165,461 | ||||||
Rate of return (r)= 11.38% | |||||||
No. of years (n)= 8 | |||||||
Future value = Present value*(1+r)^n | |||||||
Future value = 165461*(1+11.38%)^8 | |||||||
Future value = 165461*2.3684144 | |||||||
Future value = 391,880.23 | |||||||
2 | Purchase value = $4 | ||||||
Future value = $72 | |||||||
No. of years (n) = 2 | |||||||
Implied rate of return = (futureprice/purchase price)^(1/n)-1 | |||||||
Implied rate of return = ((72/4)^1/2)-1 | |||||||
Implied rate of return = 8% | |||||||
3 | Future value = $17747 | ||||||
No. of years (n) = 16 | |||||||
Rate = 13.8% | |||||||
Present value = 17747*Present value factor at 13.8% for 16 year | |||||||
Present value = 17747*Present value factor at 13.8% for 16 year | |||||||
Present value = 17747*0.1554 | |||||||
Present value = 17747*0.1554 | |||||||
Present value = 2757.88 | |||||||
4 | Purchase value = $462 | ||||||
Future value = $844 | |||||||
No. of years (n) | |||||||
Rate of interest = 6% | |||||||
Future value = Present value*(1+r)^n | |||||||
844=462*(1+6%)^n | |||||||
844/462 =(1+6%)^n | |||||||
1.82684 at 6% from Present value annuity factor | |||||||
No. of years = 1.993 | |||||||
No. of years = 2 | |||||||
1.A company has purchased an asset for $165,461. If they require a return of 11.38%, how...
5.An investment will pay you $3,096 in 1 years if you pay $1,980 today. What is the implied rate of return? (Convert to a decimale. Round to 2 decimal places.) 6.In 1998, the average price of a gallon of gas was $1.09. Today, the average price of a gallon of gas is $2.84. At what annual rate has a gallon of gas increased over the last 20 years? (Answer as a percent. Enter only numbers and decimals in your response....
6.In 1998, the average price of a gallon of gas was $1.09. Today, the average price of a gallon of gas is $2.84. At what annual rate has a gallon of gas increased over the last 20 years? (Answer as a percent. Enter only numbers and decimals in your response. Round to 2 decimal places.) 7.Your goal is to have $76,023. If you can earn 11.9% per year and you invest $18,064 today, how many years until you reach your...
1.Suppose that 2 years ago you bought an old record player at a yard sale for $1. You saw today on E-bay that the same record player is selling for $53. If you were to sell the record play at that price today, what would be the implied return percentage? (Convert to a percent. Round to 2 decimal places. 2.in 1998, the average price of a gallon of gas was $1.07. Today, the average price of a gallon of gas...
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