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HW-1453 Finance Qs 6-10
6. A stock investor deposited $1000 four years ago in a non-dividend paying stock. Today the stock is valued at $814. What annual rate of return has this investor earned?
7. A friend wants to retire in 30 years when he is 65. At age 35, he can invest $300/month that earns 6% each year. But he is thinking of waiting 15 years when he is age 50, and then investing $900/month to catch up, earning the same 6% per year. He feels that by investing three times as much for half as many years (15 instead of 30 years) he will have more. What is the future value of each of these options at age 65, and under which scenario would he accumulate more money?
Scenario A:
Scenario B:
Best:
8. Compute the present value of a one-time payment of $1,000 paid in four years using the following discount rates: 1.0% in year 1, 2.0% in year 2, 4% in year 3, and 3% in year 4.
Present Value:
9. TV’s R Yours is advertising a deal, in which you buy a flat screen TV for $4,769 (including tax) with one
Answer will be sent by email as attachment.
7. A friend wants to retire in 30 years when he is 65. At age 35, he can invest $300/month that earns 6% each year. But he is thinking of waiting 15 years when he is age 50, and then investing $900/month to catch up, earning the same 6% per year. He feels that by investing three times as much for half as many years (15 instead of 30 years) he will have more. What is the future value of each of these options at age 65, and under which scenario would he accumulate more money?
Scenario A:
Scenario B:
Best:
8. Compute the present value of a one-time payment of $1,000 paid in four years using the following discount rates: 1.0% in year 1, 2.0% in year 2, 4% in year 3, and 3% in year 4.
Present Value:
9. TV’s R Yours is advertising a deal, in which you buy a flat screen TV for $4,769 (including tax) with one
Answer will be sent by email as attachment.
