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In: Finance
You invest $x today at 8% APR compounded annually for 5 years (you invest only once)....
You invest $x today at 8% APR compounded annually for 5 years (you invest only once). Your friend also invests some amount at the same time at 8% APR compounded annually for 5 years. However, she invests an additional amount equal to the accumulated interest at the end of each year. You both end up having the same amount at the end of 5 years. In order to achieve this, your initial investment must have been t times as much as your friend’s. What is the friend's effective APR and why? What is t?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
You invest $x today at 8% APR compounded annually for 5 years (you invest only once)....
You invest $x today at 8% APR compounded annually for 5 years
(you invest only once). Your friend also invests some amount at the
same time at 8% APR compounded annually for 5 years. However, she
invests an additional amount equal to the accumulated interest at
the end of each year. You both end up having the same amount at the
end of 5 years. In order to achieve this, your initial investment
must have been t times as much...
If you invest $1,632 today and in years 1, 2 and 3 in an account that earns 4.28% APR (compounded annually), how much will you have in the account in 17 years?
If you invest $1,632 today and in years 1, 2 and 3 in an account that earns 4.28% APR (compounded annually), how much will you have in the account in 17 years?
Time value Personal Finance Problem You have $1,800 to invest today at 8% interest compounded annually....
Time value Personal Finance Problem You have $1,800 to invest
today at 8% interest compounded annually.
a. Find how much you will have accumulated in the account at the
end of (1) 3 years, (2) 6 years, and (3) 9 years.
b. Use your findings in part a to calculate the amount of
interest earned in (1) the first 3 years (years 1 to 3), (2)
the second 3 years (years 4 to 6), and (3) the third 3 years...
If you invest $4,000 today, how much will you have in 5 years at 6% (compounded...
If
you invest $4,000 today, how much will you have in 5 years at 6%
(compounded semiannually)?
You have found three investment choices for a one-year deposit 11.7 % APR compounded monthly, 11.7 % APR compounded annually, and 10 8% APR compounded daily
You have found three investment choices for a one-year deposit 11.7 % APR compounded monthly, 11.7 % APR compounded annually, and 10 8% APR compounded daily. Compute the EAR for each investment choice (Assume that there are 365 days in the year) (Note Be careful not to round any intermediate steps less than six decimal places) The EAR for the first investment choice is% (Round to three decimal places) The EAR for the second investment choice is % (Round to three decimal...
You invest $75,000 today at a 5.5% annual rate that is compounded quarterly. After 8 years...
You invest $75,000 today at a 5.5% annual rate that is
compounded quarterly. After 8 years the interest rate increases to
an 7.5% rate compounded monthly. What is the investment worth in 18
years?
Your investment account pays 8.2%, compounded annually. If you invest $5,000 today, how many years will...
Your investment account pays 8.2%, compounded annually. If you
invest $5,000 today, how many years will it take for your
investment to grow to $9,140.20?
Select the correct answer.
a. 9.15
b. 12.15
c. 7.65
d. 6.15
e. 10.65
One year ago Lerner and Luckmann Co. issued 15-year,
noncallable, 8% annual coupon bonds at their par value of $1,000.
Today, the market interest rate on these bonds is 5.5%. What is the
current price of the bonds, given that they...
a: Compute the future value of $1,900 continuously compounded for 8 years at an APR of...
a: Compute the future value of $1,900 continuously compounded
for 8 years at an APR of 10 percent. (Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
b: Compute the future value of $1,900
continuously compounded for 5 years at an APR of 9 percent.
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
c: Compute the future value of $1,900
continuously compounded for 10 years at an...
How much will be in an account at the end of 5 years if you deposit $10,000 today at 8.7% annual interest, compounded semi-annually?
Practice Time Value of Money Problems 1. How much will be in an account at the end of 5 years if you deposit $10,000 today at 8.7% annual interest, compounded semi-annually? 2. What is the balance at the end of 10 years if $2.500 is deposited today and the account earns 4% interest annually? What about if it's quarterly interest? Which one should be more and why? 3. Suppose you want to have $500,000 saved by the time you reach 30 years old....
You plan to invest $2,000 today in a mutual fund that earns 6% annually for 5...
You plan to invest $2,000 today in a mutual fund that earns 6%
annually for 5 years. Which of the following statements is
TRUE?
Select one:
a. All else being equal, if the interest rate doubles, the
future value doubles.
b. All else being equal, if the number of periods doubles, the
future value doubles.
c. All else being equal, if both the interest rate and the
number of periods double, the future value doubles.
d. All else being equal,...
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