Problem 5.33 – Investment Future Values
Essentials of Corporate Finance
Ross, Westerfield, and Jordan
10th Edition and 11th Edition
Given the monthly interest rate, determine the amount you will have per dollar invested in various years.
Given the monthly interest rate, determine the amount you will have per dollar invested in various years.
Determine the rate that the investor received on this investment.
What is the present value of two salary options offered by an investment banking firm, one with a monthly salary and the other with a monthly salary and a signing bonus, given a certain interest rate? Determine the present value of option 1 and the present value of option 2.
What is the price of a contract offered by Peter Lynchpin, which pays a fixed amount at the end of each year for a certain number of years, if a certain annual return is required? How much will you pay for the contract today?
What is the rate of return for two investments, each with an up-front cost of a fixed amount, that yield different amounts after a specified number of years?
What is the effect of changing interest rates on the value of an annuity with a fixed number of annual payments at a fixed amount? Determine the present value of the investment at three different interest rates.
Determine how many payments will have to be made until your account balance reaches a targeted level.
What is the maximum interest rate that can be afforded on a loan to buy a sailboat, with a fixed monthly payment and a specified loan term with monthly compounding?
Note: The APR is the interest rate, it’s known as the annual percentage rate.
Determine the present value of the deal that the running back scampered off with. You are given a contract worth, an immediate payment to the athlete followed by a series salaries.
Given the contract signed, the amount paid immediately, and the remaining salaries… find the present value.