1) How long does it take for an investment to quadruple in value if the investment...
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1) How long does it take for an investment to quadruple in value if the investment yields 5% per year? 2) What is the effective annual rate of interest for a loan that has an 8% annual percentage rate (APR), compounded monthly? 3) The average price of a hockey ticket at the end of 1979 was $30 and the average price of a hockey ticket at the end of 2000 was $75. At what annual rate did hockey prices grow? 4) If I invest $1000 today in an investment that earns 7% per year, compounded semi- annually, how much will I have in this account at the end of twenty years if I make no withdrawals? 5) Suppose that you trying to borrow money from your mother-in-law to finance your business. And suppose that you promise to repay her in three installments; the first payment in three years of $10,000, the second payment in five years for $15,000 and the final payment in seven years for $20,000. If your mother-in-law opportunity cost of funds is 10%, how much is she willing to lend you? 6) Your first child has just been born. You want to give her a million dollars when she retires at age 65. You decide to open a savings account where you would deposit an equal amount every three months. If you expect to earn 10% compounded quarterly, what would be the size of the quarterly deposit? 7) What is the future value of an annuity due for which $100 per month is deposited into an account paying 12% compounded monthly for 8.5 years? 8) You look at your budget and decide that you can afford $550 per month for a new car. What is the maximum loan you can afford if the interest rate is 8% compounded monthly and you want to repay the loan in four years? 9) John and Denise are partners in a law firm. They have decided to set aside a fund for their loyal secretary who will retire in 10 years. John wants to make a $100 monthly deposit into an account while Denise wants to make a lump-sum deposit today. How much will be in the account in 10 years if the interest rate is 10% compounded monthly and how much should Denise deposit in order to equal John's contribution? 1) How long does it take for an investment to quadruple in value if the investment yields 5% per year? 2) What is the effective annual rate of interest for a loan that has an 8% annual percentage rate (APR), compounded monthly? 3) The average price of a hockey ticket at the end of 1979 was $30 and the average price of a hockey ticket at the end of 2000 was $75. At what annual rate did hockey prices grow? 4) If I invest $1000 today in an investment that earns 7% per year, compounded semi- annually, how much will I have in this account at the end of twenty years if I make no withdrawals? 5) Suppose that you trying to borrow money from your mother-in-law to finance your business. And suppose that you promise to repay her in three installments; the first payment in three years of $10,000, the second payment in five years for $15,000 and the final payment in seven years for $20,000. If your mother-in-law opportunity cost of funds is 10%, how much is she willing to lend you? 6) Your first child has just been born. You want to give her a million dollars when she retires at age 65. You decide to open a savings account where you would deposit an equal amount every three months. If you expect to earn 10% compounded quarterly, what would be the size of the quarterly deposit? 7) What is the future value of an annuity due for which $100 per month is deposited into an account paying 12% compounded monthly for 8.5 years? 8) You look at your budget and decide that you can afford $550 per month for a new car. What is the maximum loan you can afford if the interest rate is 8% compounded monthly and you want to repay the loan in four years? 9) John and Denise are partners in a law firm. They have decided to set aside a fund for their loyal secretary who will retire in 10 years. John wants to make a $100 monthly deposit into an account while Denise wants to make a lump-sum deposit today. How much will be in the account in 10 years if the interest rate is 10% compounded monthly and how much should Denise deposit in order to equal John's contribution?
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Answer 1 To find out how long it takes for an investment to quadruple in value with a 5 annual yield we can use the compound interest formula A P1 rnnt Where A Final amount quadruple the initial inves... View the full answer
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