4. What is the future value of $15,000 saved at i=38.45% , compounded quarterly in 2...

4. What is the future value of $15,000 saved at i=38.45% , compounded quarterly in 2 years?

5. Suppose you save $19,000 per year in an ordinary annuity promising you an interest rate of i=7.625% compounded once per year. How much will you have after 35 years?

6. A risk-free bond will pay you $1,000 in 1 year. The annual discount rate is i=19.69% compounded annually. What is the bond’s present value?

7. A risk-free bond will pay you $1,000 in 2 years and nothing in between. The annual discount rate is i=67.5% compounded annually. What is the bond’s present value?

Solutions

Expert Solution

	Future value	PV×(1+r)^n

	Here,

A	Interest rate per annum	38.45%
B	Number of years	2
C	Number of compoundings per per annum	4
A÷C	Interest rate per period ( r)	9.61%
B×C	Number of periods (n)	8
	Present value (PV)	$ 15,000

	Future value	31,258.77
		15000×(1+9.61%)^8

jeff jeffy answered 1 year ago

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