Question

1) You just purchased an investment at a price of $2500. The investment promises to pay $400 in 1 year, $600 in 2 years, $800 in 3 years, $900 in 4 years, and $1200 in 5 years. What rate of return will you earn on this investment? Express your answers as a percentage. (Enter only numbers and decimals in your response. Round to 2 decimal places.)

A. You wish to save $9,000 at the end of 5 years by depositing in $1,000 into your savings account in Year 1, $1,400 in 2 years, $1,600 in 3 years, $1,800 in 4 years, and $1,900 in 5 years. What interest rate must you earn to reach to goal? Express your answers as a percentage. (Enter only numbers and decimals in your response. Round to 2 decimal places.)

B/ You just purchased an investment at a price of $3000. The investment promises to pay $400 immediately, $600 in 1 year, $800 in 2 years, $900 in 3 years, and $1200 in 4 years. What rate of return will you earn on this investment? Express your answers as a percentage. (Enter only numbers and decimals in your response. Round to 2 decimal places.)

Answer 1

Ans 1
	Year	Cash flow
	0	($2,500)
	1	400
	2	600
	3	800
	4	900
	Rate=	2.79%	<using excel formula>>
	Ans =	2.79%
Ans 2
	Year	Cash flow
	0	$0
	1	-1000
	2	-1400
	3	-1600
	4	-1800
	5	9,000
	Rate=	20.23%	<using excel formula>>
	Ans =	20.23%
Ans 3
	Year	Cash flow
	0	($2,600)
	1	600
	2	800
	3	900
	4	1200
	Rate=	11.62%	<using excel formula>>
	Ans =	11.62%