Question

In: Finance

Calculate using Excel:Your friend claims that he invested $5,000 seven years ago andthat this...

Calculate using Excel:

Your friend claims that he invested $5,000 seven years ago and that this investment is worth $ 38,700 today. For this to be true, what annual rate of return did he have to earn? Assume the interest compounds annually.

Solutions

Expert Solution

Amount Invested = $5,000

Future Value in 7 years = $38,700

calculating the Annual rate of Return using the Excel "RATE" function:-

The annual rate of return is 33.96%.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

You invested money in a savings account paying 10% interest seven years ago.
You invested money in a savings account paying 10% interest seven years ago.  The account is now worth $5,527.50.  How much did you invest?
Ten years ago, you invested $2,000. Today it is worth $5,000. What rate of interest did...
Ten years ago, you invested $2,000. Today it is worth $5,000. What rate of interest did you earn? A. 9.60 percent B. 9.97 percent C. 9.03 percent D. 9.18 percent
4 years ago , Paul invested $1500. Three years ago, Trek invested $1600. Today, these two...
4 years ago , Paul invested $1500. Three years ago, Trek invested $1600. Today, these two investments are each worth $1800. Assume each account continues to earn its respective rate of return. (1) What is annual interest rate that Saul earned? (2) What is annual interest rate that Trek earned？ (3) Was Trek’s investment worth less than Saul one year ago?
Peter Goodman invested $40,000 in the Carters balanced mutual fund 5 years ago and he is...
Peter Goodman invested $40,000 in the Carters balanced mutual fund 5 years ago and he is looking for advice on whether to sell this investment. He is really concerned about his return being influenced by inflation. His tax rate is 30% and the inflation rate is 1.5% p.a. Assume that taxes will be paid when he sells the investment. His investment accounts earned the following annual rates of return: +2%, +8%, +5%, +1%, -4%. a) Calculate the arithmetic and geometric...
Peter Goodman invested $40,000 in the Carters balanced mutual fund 5 years ago and he is...
Peter Goodman invested $40,000 in the Carters balanced mutual fund 5 years ago and he is looking for advice on whether to sell this investment. He is really concerned about his return being influenced by inflation. His tax rate is 30% and the inflation rate is 1.5% p.a. Assume that taxes will be paid when he sells the investment.  His investment accounts earned the following annual rates of return: +2%, +8%, +5%, +1%, -4%. Calculate the arithmetic and geometric mean rate...
Four years ago, Paul invested $1500. Three years ago, Trek invested $1600. Today, these two investments...
Four years ago, Paul invested $1500. Three years ago, Trek invested $1600. Today, these two investments are each worth $1800. Assume each account continues to earn its respective rate of return. (1) What is annual interest rate that Saul earned? (2) What is annual interest rate that Trek earned？ (3) Was Trek’s investment worth less than Saul one year ago?
Seven years ago, Emmanual purchased a beautiful new home. He financed the acquisition with a 30-year...
Seven years ago, Emmanual purchased a beautiful new home. He financed the acquisition with a 30-year mortgage. The original loan amount was $185,000, and the rate on the mortgage was 5.6 percent per year (compounded monthly). The mortgage requires monthly payments. Today, Emmanuel decided he wants to pay off the loan.  What is the current outstanding balance on this mortgage? (Assume the mortgage has 23 years remaining, and the next payment is due in one month.)
You lend $400,000 to your friend for seven years. According to the agreement, your friend has...
You lend $400,000 to your friend for seven years. According to the agreement, your friend has to repay $89,000 annually for the first four years with a fixed interest rate of 15% compounded annually. Your friend tries to bargain for a 13% charged for the remaining periods. What should be the annual repayment for the last three years?
Eleven years ago, you deposited $3,200 into an account. Seven years ago, you added an additional...
Eleven years ago, you deposited $3,200 into an account. Seven years ago, you added an additional $1,000 to this account. You earned 9.2 percent, compounded annually, for the first 4 years and 5.5 percent, compounded annually, for the last 7 years. How much money do you have in your account today? $8,666.67 $7,717.29 $7,411.90 $8,708.15 $8,073.91
Juan Garza invested $111,000 3 years ago at 16 percent, compounded quarterly. How much has he...
Juan Garza invested $111,000 3 years ago at 16 percent, compounded quarterly. How much has he accumulated? Use Appendix A for an approximate answer but calculate your final answer using the formula and financial calculator methods.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT