Question

2. Suppose that 2 years ago you bought an old record player at a yard sale for $10. You saw today on E-bay that the same record player is selling for $79.99. If you were to sell the record play at that price today, what would be the implied return percentage? (Enter only numbers in your response. Round to 2 decimal places.)

3. In 1998, the average price of a gallon of gas was $1.06. Today, the average price of a gallon of gas is $2.85. At what annual rate has a gallon of gas increased over the last 20 years?

4. If you have $500 today and you think you can earn an interest rate of 7% per year, how many years until you have $750?

5. How many years will it take to double your money if the interest rate is 12.25%? Assume that you make an investment of $100

6. You deposit $200 into a simple interest account that earns 8% per year. What will its value be in 6 years?

7. You have just inherited a property worth $150,000. If you estimate that the property will increase in value by 3% per year, how much will it be worth in 6 years? (Enter only numbers in your response. Round to 2 decimal places.)

8. A company has purchased an asset for $300,000 that they plan to sell in 3 years. If they require a return of 13%, how much must they sell the asset for in 3 years?

Answer 1

2-	Implied rate of return =(future price/purchase price)^(1/n) -1	(79.99/10)^(1/2)-1	183%
3-	Implied rate of return =(future price/purchase price)^(1/n) -1	(2.85/1.06)^(1/20)-1	5%
4-	Nper =time required to earn 750	Using nper function in MS excel =nper(rate,pmt,pv,fv,type) rate =7% pmt = 0 pv = -500 fv = 750 type =0	NPER(7%,0,-500,750,0)	5.99	6 Years
5-	Nper =time required to earn 750	Using nper function in MS excel =nper(rate,pmt,pv,fv,type) rate =12.25% pmt = 0 pv = -100 fv = 200 type =0	NPER(12.25%,0,-100,200,0)	6.00
6-	Value in six year	Principal+(principal*rate*year)	200+(200*8%*6)	296
7-	Worth of property In six years	principal*(1+growth rate)^n	150000*(1.03)^6	179107.84
8-	sale price of assets in three years	purchase price*(1+r)^n	300000*(1.13)^3	432869.1