B C In-class activities Time Value of Money, Part 2 D E F G H 1. A security has a cost of $1,000 and will return $2,000 after 5 years. What rate of return does the security provide? A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Inputs: PV = -1000 FV = 2000 r/YR = N = ? 5 15 Wizard (Rate): Note: Use zero for Pmt since there are no periodic payments. Note that the PV is given a negative sign 16 because it is an outflow (cost to buy the security). Also, note that you must scroll down the menu to 17 complete the inputs. 18 19 2. Suppose California's population is 30 million people, and its population is expected to grow by 20 2% per year. How long would it take for the population to double? 21 22 Inputs: 23 PV = FV = -30 60 24 25 r/YR = growth rate N = 2% 26 27 Wizard (NPER): 28 29 30 = Years to double. 31 3. What is the future value of $100 after 5 years under 12% annual compounding? 32 33 nX1 34 r 35 PV 36 37 FV = EAR = 38 What is the FV with semiannual compounding?What is the EAR%? 39 40 nX2 FV =