Question

In: Finance

Current Attempt in Progress Incorrect answer iconYour answer is incorrect. Your brother has asked you for...

Current Attempt in Progress

Incorrect answer iconYour answer is incorrect.

Your brother has asked you for a loan and has promised to pay you $9,750 at the end of three years. If you normally invest to earn 5.40 percent per year, how much will you be willing to lend to your brother if you view this purely as a financial transaction (i.e., you don’t give your brother a special deal)? (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.)

Amount to be invested today

$

Betty Harris is saving to buy a house in five years. She plans to put 20 percent down at that time, and she believes that she will need $26,000 for the down payment. If Betty can invest in a fund that pays 9.60 percent annual interest, compounded quarterly, how much will she have to invest today to have enough money for the down payment? (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.)

Excel Template
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Amount to be invested today

$

You invest $180 in a mutual fund today that pays 8.70 percent interest annually. How long will it take to double your money? (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to 0 decimal place, e.g. 545)

Number of years

Expert Solution

1. Your brother has asked you for a loan and has promised to pay you $9,750 at the end of three years. If you normally invest to earn 5.40 percent per year, how much will you be willing to lend to your brother if you view this purely as a financial transaction (i.e., you don’t give your brother a special deal)? = $26353.90

2. Betty Harris is saving to buy a house in five years. She plans to put 20 percent down at that time, and she believes that she will need $26,000 for the down payment. If Betty can invest in a fund that pays 9.60 percent annual interest, compounded quarterly, how much will she have to invest today to have enough money for the down payment? $16179.84

You invest $180 in a mutual fund today that pays 8.70 percent interest annually. How long will it take to double your money?

Time to double the money = Log(2) / (log(1 + Interest)

Time to double the money = Log(2) / (log(1 + 0.087)

Time to double the money = 0.30103 / 0.03623

Time to double the money = 8 years

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jeff jeffy answered 2 years ago

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