you have an opportunity to invest in a business that will double your money in 8...

you have an opportunity to invest in a business that will double your money in 8 years. what is the annual rate of return of this investment opportunity

Solutions

Expert Solution

As the money doubles in 8 years,

Using Rule of 72,

Rate of interest = 72/ Number of years = 72/8 = 9% pa

So, using the rule of 72, the investment yields 9% pa

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

You have been offered a unique investment opportunity. If you invest $ 8 900 today, you...

You have been offered a unique investment opportunity. If you invest $ 8 900 today, you will receive $ 445 one year from now, $ 1 335 two years from now, and $ 8 900 ten years from now. a. What is the NPV of the opportunity if the cost of capital is 6.3 % per year? Should you take the opportunity? b. What is the NPV of the opportunity if the cost of capital is 2.3 % per year?...

You have $1 million to invest, and you must invest all your money. The following are...

You have $1 million to invest, and you must invest all your money. The following are assets you can invest: Expected Return Beta Risk-free asset 6% Not given Stock X 30% 1.8 Stock Y 20% 1.3 (a) Suppose you want to create a portfolio that has an expected return of 12% by investing in the risk-free asset and Stock X. Calculate how much money you will invest in Stock X. (b) Suppose you want to create a portfolio with a...

Suppose you have some money to invest. You hope that you will start a business with...

Suppose you have some money to invest. You hope that you will start a business with that money. You may or may not involve other partners and you may or may not choose the company structure as the form of your business. Considering the relative advantages and disadvantages of the different legal forms of businesses (i.e. sole trader, partnership or company), which form will you choose for your business and why? What are the advantages and disadvantages you expect due...

If you are offered to invest an amount of $ 100,000 in a business opportunity that...

If you are offered to invest an amount of $ 100,000 in a business opportunity that expected to achieve operating cash inflow after considering taxes (net of taxes & before depreciation) in the future as follows: Year (1) $ 32,000, Year (2) $ 35,000, Year (3) $ 40,000, & Year (4) $ 25,000 Would you accept this business opportunity if the required rate of returns is 15%? ---------------------------------- If you have the following information about an investment opportunity: Initial investment...

Your friend Jack offers you the opportunity to invest in his new business that sells the...

Your friend Jack offers you the opportunity to invest in his new business that sells the best lemonade in the world, or so he says. Jack says that there is a 60% chance that the investment will be worth $200,000 one year from today, and a 40% chance it won’t be worth anything. If you require a risk premium of 8% and T-bills are currently paying 4% per year, what price will you be willing to pay Jack for the...

Suppose you have $10,000 in your bank account and the opportunity to invest in a 5-year...

Suppose you have $10,000 in your bank account and the opportunity to invest in a 5-year project with the following certain cash flows: Year 1 2 3 4 5 CF $0 $0 $0 $0 $25,000 The risk-free interest rate in the economy is 10% per year for the next 5 years. Yesterday however, your car suddenly broke down and you need to buy a new one which would cost $10,000. Assume you really need the car to go to work,...

Double your money—Rule of 72. Approximately how long will it take to double your money if...

Double your money—Rule of 72. Approximately how long will it take to double your money if you get an annual return of 3.6%, 7.1%, or 9.8% on your investment? Approximately how long will it take to double your money if you get a 3.6% annual return on your investment?

A business opportunity has presented itself to you and one of your classmates. Your opportunity is...

A business opportunity has presented itself to you and one of your classmates. Your opportunity is to enter the fast-growing craft beer industry. Your projected sales in the first year is 7500 kegs. Your projected growth rate is 5 percent. Entering the business will require $35,000 of net working capital. Total fixed costs are $95,000. Variable production costs are $32 per keg and keg sales are priced at $56 each. The equipment to begin production is $175,000. The equipment will...

A business opportunity has presented itself to you and one of your classmates. Your opportunity is...

A business opportunity has presented itself to you and one of your classmates. Your opportunity is to enter the fast growing craft beer industry. Your projected sales in the first year is 7500 kegs. Your projected growth rate is 8 percent. Entering the business will require $35,000 of net working capital. Total fixed costs are $95,000. Variable production costs are $30 per keg and keg sales are priced at $55 each. The equipment to begin production is $175,000. The equipment...

A business opportunity has presented itself to you and one of your classmates. Your opportunity is...

A business opportunity has presented itself to you and one of your classmates. Your opportunity is to enter the fast-growing craft beer industry. Your projected sales in the first year is 8300 kegs. Your projected growth rate is 5 percent. Entering the business will require $35,000 of net working capital. Total fixed costs are $95,000. Variable production costs are $36 per keg and keg sales are priced at $57 each. The equipment to begin production is $175,000. The equipment will...

Subjects