1. You can buy a contract which will pay $ 10,000 per year for 3 years for...
Question:
1. You can buy a contract which will pay $ 10,000 per year for 3 years for $26,500. If investments of similar risk return 8% per annum, compounded annually, should you buy the contract?
2. How much do you need to deposit TODAY into an account which earn 8% ANNUAL interest compounded Quarterly so that you will have $ 50,000 in the account seven years from now?
3. What ANNUAL rate of return did an investment pay if a $ 15,250 deposited FIVE YEARS AGO has grown to $ 23,460 TODAY?
4. What is the maximum amount you should be willing to pay TODAY for a contract which will pay $12,500 per year for 5 years beginning one year from today if contracts (investments) of similar risk return 7% per year?
Fundamentals of Financial Management
ISBN: 978-1337395250
15th edition
Authors: Eugene F. Brigham, Joel F. Houston