Q: You have $100 and a bank is offering 5% interest
You have $100 and a bank is offering 5% interest on deposits. If you deposit the money in the bank, how much will you have in one year?
See AnswerQ: A friend asks to borrow $55 from you and in return
A friend asks to borrow $55 from you and in return will pay you $58 in one year. If your bank is offering a 6% interest rate on deposits and loans: a. How much would you have in one year if you deposi...
See AnswerQ: Cooperton Mining just announced it will cut its dividend from $4
Cooperton Mining just announced it will cut its dividend from $4 to $2.50 per share and use the extra funds to expand. Prior to the announcement, Cooperton’s dividends were expected to grow at a 3% ra...
See AnswerQ: Suppose the interest rate is 4%. a. Having $
Suppose the interest rate is 4%. a. Having $200 today is equivalent to having what amount in one year? b. Having $200 in one year is equivalent to having what amount today? c. Which would you prefer,...
See AnswerQ: You want to endow a scholarship that will pay $10,
You want to endow a scholarship that will pay $10,000 per year forever, starting one year from now. If the school’s endowment discount rate is 7%, what amount must you donate to endow the scholarship?...
See AnswerQ: Consider the following alternatives: i. $100 received in
Consider the following alternatives: i. $100 received in one year ii. $200 received in 5 years iii. $300 received in 10 years a. Rank the alternatives from most valuable to least valuable if the inter...
See AnswerQ: Suppose you invest $1000 in an account paying 8% interest
Suppose you invest $1000 in an account paying 8% interest per year. a. What is the balance in the account after 3 years? How much of this balance corresponds to “interest on interest”? b. What is the...
See AnswerQ: Calculate the future value of $2000 in a. 5
Calculate the future value of $2000 in a. 5 years at an interest rate of 5% per year. b. 10 years at an interest rate of 5% per year. c. 5 years at an interest rate of 10% per year. d. Why is the amou...
See AnswerQ: What is the present value of $10,000 received
What is the present value of $10,000 received a. 12 years from today when the interest rate is 4% per year? b. 20 years from today when the interest rate is 8% per year? c. 6 years from today when th...
See AnswerQ: Your brother has offered to give you either $5000 today or
Your brother has offered to give you either $5000 today or $10,000 in 10 years. If the interest rate is 7% per year, which option is preferable?
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