Maggie deposits $10,000 today and is promised a return of$17,000 in eight years. What is...

Maggie deposits $10,000 today and is promised a return of $17,000 in eight years. What is the implied annual rate of return

Solutions

Expert Solution

Formula:

Future value= present value(1+r)^n

r= interest rate for the period.
n = number of periods.

17,000 = 10,000*(1+r)^8
r= 6.86%

Implied annual rate of return is 6.86%

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

You have won $10,000 today, $20,000 three years from today, and $60,000 eight years from today....

You have won $10,000 today, $20,000 three years from today, and $60,000 eight years from today. As an alternative, you can receive your winnings as a 10-year annuity with the first payment received four years from today. If you require a 6% return on your investment, how much must the annuity pay you each year for you to select that option?

Question 152 pts Matt promised to pay Cameron $5,000 ''in appreciation for his eight years of...

Question 152 pts Matt promised to pay Cameron $5,000 ''in appreciation for his eight years of past employment." Matt later changed his mind and refused to pay Cameron the money. Cameron sues Matt. Who should win? Group of answer choices Matt, because the facts reveal neither consideration for his promise nor a basis for promissory estoppel. Cameron, because his eight years of service to Matt is consideration for Matt' s promise. Cameron, because Matt's promise was in writing. Matt, because...

You are promised $10,000 a year for six years after which you will receive $5,000 a...

You are promised $10,000 a year for six years after which you will receive $5,000 a year for six years. If you can earn 8 percent annually, what is the present value of this stream of payments? Show how to solve in Excel, Step-By-Step

A project that provides annual cash flows of $17,000 for 6 years costs $60,000 today. a....

A project that provides annual cash flows of $17,000 for 6 years costs $60,000 today. a. If the required return is 10 percent, what is the NPV for this project? b. Determine the IRR for this project.

You are scheduled to be paid $10,000 in four years. What amount today is equivalent to...

You are scheduled to be paid $10,000 in four years. What amount today is equivalent to the $10,000 to be received in four years assuming interest is compounded annually at six percent? Use Excel or a financial calculator for computation. Round answer to the nearest dollar. What amount will be accumulated in four years if $10,000 is invested every six months beginning in six months and ending four years from today? Interest will accumulate at an annual rate of ten...

A project that provides annual cash flows of $17673 for eight years costs $80339 today. What...

A project that provides annual cash flows of $17673 for eight years costs $80339 today. What is the NPV for the project if the required return is 19 percent? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

Burt deposits $10,000 into a bank account today. The account earns 5% per annum compounding daily...

Burt deposits $10,000 into a bank account today. The account earns 5% per annum compounding daily for the first 2 years, then 5.5% per annum compounded quarterly thereafter. No further deposits or withdrawals will be made. For this question, assume all months are of equal length (30 days) and ignore leap years. (d) Calculate the account balance 10 years from today.

Homework Question: Burt deposits $10,000 into a bank account today. The account earns 4% per annum...

Homework Question: Burt deposits $10,000 into a bank account today. The account earns 4% per annum compounding daily for the first 3 years, then 3.5% per annum compounded quarterly thereafter. No further deposits or withdrawals will be made. For this question, assume all months are of equal length and ignore leap years. (a) Calculate the account balance six months from today. (b) Calculate the account balance 3 years from today. (c) Calculate the account balance 3.5 years from today. (d)...

Burt deposits $10,000 into a bank account today. The account earns 4.5% per annum compounding daily...

Burt deposits $10,000 into a bank account today. The account earns 4.5% per annum compounding daily for the first 4 years, then 3.5% per annum compounded quarterly thereafter. No further deposits or withdrawals will be made. For this question, assume all months are of equal length and ignore leap years. (a) Calculate the account balance six months from today. (b) Calculate the account balance 4 years from today. (c) Calculate the account balance 4.5 years from today. (d) Calculate the...

Burt deposits $10,000 into a bank account today. The account earns 4% per annum compounding daily...

Burt deposits $10,000 into a bank account today. The account earns 4% per annum compounding daily for the first 3 years, then 3.5% per annum compounded quarterly thereafter. No further deposits or withdrawals will be made. For this question, assume all months are of equal length and ignore leap years. (a) Calculate the account balance six months from today. (b) Calculate the account balance 3 years from today. (c) Calculate the account balance 3.5 years from today. (d) Calculate the...

Subjects