Question

**Finding the interest rate and the number of
years**

The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations.

If a security of $4,000 will be worth $4,867 five years in the future, assuming that no additional deposits or withdrawals are made, what is the implied interest rate the investor will earn on the security?

2.40%

3.00%

4.00%

4.80%

If an investment of $40,000 is earning an interest rate of 7.50% compounded annually, it will take 1.8 years for this investment to grow to a value of $71,339.11—assuming that no additional deposits or withdrawals are made during this time?

Which of the following statements is true, assuming that no additional deposits or withdrawals are made?

It takes 14.2 years for $500 to double if invested at an annual rate of 5%.

It takes 10.5 years for $500 to double if invested at an annual rate of 5%.

Answer #1

If a security of $4,000 will be worth $4,867 five years in the future, assuming that no additional deposits or withdrawals are made, what is the implied interest rate the investor will earn on the security?

=(4867/4000)^(1/5)-1=4.00%

If an investment of $40,000 is earning an interest rate of 7.50% compounded annually, it will take 1.8 years for this investment to grow to a value of $71,339.11—assuming that no additional deposits or withdrawals are made during this time?

Time taken to become 71339.11=log(71339.11/40000)/log(1+7.5%)=8

Which of the following statements is true, assuming that no additional deposits or withdrawals are made?

=log(2)/log(1+5%)=14.20669908

It takes 14.2 years for $500 to double if invested at an annual rate of 5%.

5. Finding the interest rate and the number of
years
The future value and present value equations also help in
finding the interest rate and the number of years that correspond
to present and future value calculations.
If a security currently worth $12,800 will be worth $16,843.93
seven years in the future, what is the implied interest rate the
investor will earn on the security—assuming that no additional
deposits or withdrawals are made?
0.19%
7.60%
1.32%
4.00%
If an investment...

Finding a present value is the reverse of finding a future
value.
Discounting is the process of
calculating the present value of a cash flow or a series of cash
flows to be received in the future.
Which of the following investments that pay will $19,000 in 14
years will have a higher price today?
a)The security that earns an interest rate of 7.00%.
b) The security that earns an interest rate of 10.50%.
Eric wants to invest in government...

5-1
FUTURE VALUE If you deposit $10,000 in a bank
account that pays 10% interest annually, how much will be in your
account after 5 years?
5-2
PRESENT VALUE What is the present value of a
security that will pay $5,000 in 20 years if securities of equal
risk pay 7% annually?
5-3
FINDING THE REQUIRED INTEREST RATE Your parents
will retire in 18 years. They currently have $250,000, and they
think they will need $1,000,000 at retirement. What annual...

2- Compute the future value for the following:
Present Value: 107954
Years: 13
Interest rate: 10
(Provide answer to two decimals, i.e. 32.16)
3- Compute the future value for the following:
Present Value: 62132
Years: 11
Interest rate: 6
(Provide answer to two decimals, i.e. 32.16)
4- Compute the future value for the following:
Present Value: 203739
Years: 32
Interest rate: 8
(Provide answer to two decimals, i.e. 32.16)
5- Compute the present value for the following:
Future Value: 230374...

Please compute the following present values and future values:
1) The future value of $500 invested for 10 years at 10% interest.
2) The future value of $800 invested for 5 years at 15% interest.
3) The future value of $30,000 invested for 20 years at 6%. 1) The
present value of $200,000 to be received in 20 years, if
discounting at 5%. 2) The present value of $80,000 to be received
in 10 years, if discounting at 8%. 3)...

Solve for the unknown number of years in each of the
following:
Present Value
Years
Interest Rate(%)
Future Value
500
8
1,075
750
12
1,836
17800
18
294,671
20900
14
320,610

Compute Future Value:
Present Value, Years, Interest Rate= Future Value
2350, 12, 12%= ?
8952, 6, 10%=?
78355, 13, 11%=?
185796, 7, 7%=?

Future value is the value today of money at a future point in
time. For example take a $10 investment that would grow to $100 in
five years. The future value of that $10 investment is $100. It is
the value today of money tomorrow. It is calculated based on the
amount of money, the amount of time (in years) into the future and
a given monthly interest rate. Create a method with three
parameters that computes future investment using...

Find the interest rate implied by the following combinations of
present and future values: (Do not round intermediate
calculations. Enter your answers as a percent rounded to 2 decimal
places. Leave no cells blank - be certain to enter "0" wherever
required.)
Present Value
Years
Future Value
Interest Rate
$340
12
611
%
153
5
225
%
240
8
240
%

Future Value Given a 7.75 percent interest rate, compute the
year 7 future value of deposits made in years 1, 2, 3, and 4 of
$2,800, $3,000, $3,300, and $3,300.

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