Question

In: Finance

Future value​ (with changing interest​ rates). Jose has ​$8,000 to invest for a 2​-year period. He...

Future value​ (with changing interest​ rates). Jose has ​$8,000 to invest for a 2​-year period. He is looking at four different investment choices.

What will be the value of his investment at the end of 2 years for each of the following potential​ investments?

a.  Bank CD at 4.5​%.

b.  Bond fund at 7.5​%.

c. Mutual stock fund at 12​%.

d.  New venture stock at 25​%.

a.  What will be the value of​ Jose's bank CD investment that offers an annual rate of return of 4.5​% for 2 ​years? ​$ ___  ​(Round to the nearest​ cent.)

b.  What will be the value of​ Jose's bond fund investment that offers an annual rate of return of 7.5​% for 2 ​years? ​$ ___​ (Round to the nearest​ cent.)

c.  What would be the value of​ Jose's mutual stock fund investment if it earns an annual rate of return of 12​% for 2 ​years? ​$___ ​(Round to the nearest​ cent.)

d.  What would be the value of​ Jose's new venture stock investment if it earns an annual rate of return of 25​% for 2 ​years? ​$____ ​(Round to the nearest​ cent.)

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 9 months ago
Next > < Previous

Related Solutions

Future value​ (with changing interest​ rates). Jose has ​$3,000 to invest for a 6​-year period. He...
Future value​ (with changing interest​ rates). Jose has ​$3,000 to invest for a 6​-year period. He is looking at four different investment choices. What will be the value of his investment at the end of 6 years for each of the following potential​ investments? a.  Bank CD at 3​%. b.  Bond fund at 9​%. c. Mutual stock fund at 14​%. d.  New venture stock at 23​%.
Calculate the net future value at year 2 for the following cashflows and interest rates...
Calculate the net future value at year 2 for the following cash flows and interest rates compounded quarterly (rounded $ to two places after the decimal). The year 0 cash flow is $399, the year 1 cash flow is $204, and the year 2 cash flow is $-155. The interest rate for the first period (year 0 to 1) is 3% and the interest rate for the second period (year 1 to 2) is 4.7%.
1. If the future value of an ordinary, 7-year annuity is $10,000 and interest rates are...
1. If the future value of an ordinary, 7-year annuity is $10,000 and interest rates are 4%, what is the future value of the same annuity due? A. $9,615.39 B. $10,010.00 C. $10,710.00 D. $10,400.00 2.The returns on the common stock of ACME closely follow the economy. In a booming economy, the stock is expected to return 23% in comparison to 14% in a normal economy and a -18% in a recession. The probability of a recession is 18% while...
A buddy wants to invest in real estate during a 2 year period holding. He says...
A buddy wants to invest in real estate during a 2 year period holding. He says the price for buying is 575,000. And the Net Operating Income is 50,000 for the first year and 66,000 for the second and it will stabilize in the last year at 75,000. The loan to value ratio is 60%. The mortgage rate is gonna be 4.2% and every month its 0.3470%. 2 year term. Amortize for 25 years. The cap rate is 5%. Equity...
Payment Years Interest Rate (Annual) Future Value (Payment made on last day of period) Future Value...
Payment Years Interest Rate (Annual) Future Value (Payment made on last day of period) Future Value (Payment made on first day of period) $283 15 15 % 6,155 10 12 76,084 7 14 168,932 11 5 Compute the future values of the following annuities first assuming that payments are made on the last day of the period and then assuming payments are made on the first day of the period: (Do not round intermediate calculations. Round your answers to 2...
There are important relationships between Interest Rates and Time as it relates to Future Value: For...
There are important relationships between Interest Rates and Time as it relates to Future Value: For a given Interest Rate, what is the impact on Future Value if the Time Period is longer and for a given Time Period, what is the impact on Future Value if the Interest Rate is higher?
For a given time period and for the same future value amount, the higher the interest...
For a given time period and for the same future value amount, the higher the interest rate the lower the present value. T or F You are trying to save up to buy a mountain bike worth $5,900. You can invest $200 a month in your bank that pays 4.4% interest on its accounts. How many years will it be before you have enough to purchase the mountain bike? Tim has his heart set on buying a million-dollar house when...
Determining the present value of bonds payable Interest rates determine the present value of future amounts
  Question: Determining the present value of bonds payable Interest rates determine the present value of future amounts. (Round to the nearest dollar.) Requirements 1. Determine the present value of 10-year bonds payable with face value of $86,000 and stated interest rate of 14%, paid semiannually. The market rate of interest is 14% at issuance. 2. Same bonds payable as in Requirement 1, but the market interest rate is 16%. 3. Same bonds payable as in Requirement 1, but the...
What is the future value in 2 years if you invest $150 at the beginning of...
What is the future value in 2 years if you invest $150 at the beginning of each month for 10 months starting today at a rate of 3%, compounded quarterly?
Mr. Lim has $10,000 to invest for a period of 5 years. He has a choice...
Mr. Lim has $10,000 to invest for a period of 5 years. He has a choice of either the bonds or stocks of the Oxley Company. (A) Bond: Oxley’s bond: Face value $1,000, 10% coupon paid annually and 8 years’ life remaining. The bond can be purchased at $1,100 today. B) Common Stock: Oxley’s common stock just paid a dividend $0.80. Its dividend will grow at 4% per year perpetually. The stock can be purchased at $8 today. (a) Calculate...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT