Correct previous answers if wrong and fill in the rest with an explanation of where the numbers came from.

Transcribed Image Text:

Time Value of Money, Part 2 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? Inputs: Wizard (Rate): nX2 r/2 PV Inputs: PV = FV = r/YR N = Note: Use zero for Pmt since there are no periodic payments. Note that the PV is given a negative sign because it is an outflow (cost to buy the security). Also, note that you must scroll down the menu to complete the inputs. 2. Suppose California's population is 30 million people, and its population is expected to grow by 2% per year. How long would it take for the population to double? Wizard (NPER): 1.00 100.00 = PV = FV = r/YR N = 2.00 = growth rate FV = -1000 2000 14.87% 3. What is the future value of $100 after 5 years under 12% annual compounding? What is 176.23 nX1 r PV ? 5 EAR = What is the FV with semiannual compounding?What is the EAR%? FV = EAR = -30 60 2% ? 35.00 12.00% $180.61 = Years to double. 12.36% Time Value of Money, Part 2 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? Inputs: Wizard (Rate): nX2 r/2 PV Inputs: PV = FV = r/YR N = Note: Use zero for Pmt since there are no periodic payments. Note that the PV is given a negative sign because it is an outflow (cost to buy the security). Also, note that you must scroll down the menu to complete the inputs. 2. Suppose California's population is 30 million people, and its population is expected to grow by 2% per year. How long would it take for the population to double? Wizard (NPER): 1.00 100.00 = PV = FV = r/YR N = 2.00 = growth rate FV = -1000 2000 14.87% 3. What is the future value of $100 after 5 years under 12% annual compounding? What is 176.23 nX1 r PV ? 5 EAR = What is the FV with semiannual compounding?What is the EAR%? FV = EAR = -30 60 2% ? 35.00 12.00% $180.61 = Years to double. 12.36%

Answer rating: 100% (QA)

SOLUTION Part 2 1 The rate of return on the security is 1487 which means that the security provides ... View the full answer