Problem 1: How long does it take to double an investment of $10,000 having the rate of 10% per annum? a) If the investment pays simple interest. b) If the investment pays compound interest.
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- Assume you are investing $10,000 today for a given amount of time at a given interest rate. What would DECREASE the total amount of money at the end of the investment period? a. Paying of simple interest instead of compound interest b. paying and compounding interest on both the principal amount and earned interest each period c. Increasing the length of the investment period d. Increasing the interest rateuestion 1: Solve the following TVM problems using Excel formulas. You MUST use Excel formulas (FV or PV) to receive credit. ou can assume that all payments are made at the beginning of the period and use "1" for the "type" argument in the formula. A. Suppose you invest 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded annually? B. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded quarterly? C. Suppose you invest $ 570 monthly. What is the future value of the investment in 29 29 years, if interest at + 5% is compounded monthly? 5 6 7 8 19 20 21 22 23 24 25 26 27 28 29 Question 1 Question 2 + Ready Accessibility: Investigate MAR 17 A 国 W XAnswer the following Compound Interest problem using the provided formula ONLY. Show your complete solution. 10. Compound Interest An investment of P3M earns interest of 9% compounded continuously. What is the effective rate of interest?
- 2.3. Suppose the institution pays 7,5% interest, compounded annually. How long will it take for $10 000 to grow to $100 000? P = Po(1 + i) a. Calculate the value of t? b. Motivate your answer?1. $30,000 is invested at a compounded yearly interest rate of 6%, with the interest compounded constantly. (a) How long do you think it will take for the value of this original investment to double? (b) How long do you think it will take for this initial investment to quadruple in value? (c) How long do you think it will take for this initial investment to double in value? (d) Is there a pattern here? (d) Can you spot the pattern? How long will it take to achieve five times the starting sum? What if you get seven times the amount you started with? etc.Suppose the interest rate is3.6%. a. Having $650 today is equivalent to having what amount in one year? b. Having $650 in one year is equivalent to having what amount today? c. Which would you prefer, $650 today or $650 in one year? Does your answer depend on when you need the money? Why or why not? a. Having $650 today is equivalent to having what amount in one year? It is equivalent to $____. (Round to the nearest cent.)
- 2(d) Consider an investment that pays Rs. 6,880 in interest every year plus 86,000 when it matures in 12 years. You can buy the investment today for Rs. 64,758. What is the IRR of this investment?b. Calculate the present value of $5,000 received five years from today if your investment pays 6% compounded annually and 8% compounded annually. What do your answers tell you about the relation between present values and interest rates. Answer: b. (1) PV =1. Ati= 10% per year and a loan amount of $10,000. If N = 20, what are the payments and future value? Solve this problem using %3! a. Excel b. Formula
- ou can assume that all payments are made at the beginning of the period and use "1" for the "type" argument in the formula. A. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded annually? B B. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded quarterly? 4 5 6 27 28 29 C. Suppose you invest St $ 570 monthly. What is the future value of the investment in 29 years, if interest at 5% is compounded monthly? Question 1 Question 2 + Ready Accessibility: Investigate MAR 17 A W +Example 1. Compound interest When interest is compounded continuously, the rate of change of the amount x of the investment is proportional to the amount present. In this case, the proportionality constant is the annual interest rate r (as a decimal); that is, dx/dt = rx. (a) If $2000 is invested at 8%, compounded continuously, find an equation for the future value of the investment as a function of time t, in years. (b) How long will it take for the investment to double? (c) What will be the future value of this investment after 35 years?An investment becomes P 4,500,000 four years from now and becomes P 5,250,000 thirteen years from now. a. Assuming rate of compounded interest remains constant through time, what was the investment's value on the present time? b. What rate of interest compounded quarterly is equivalent to the interest rate of the given investment? c. What rate of interest compounded monthly is equivalent to the interest rate of the given investment?