BUSI 422 Read & Interact Brueggeman & Fisher Chapter 3 solutions complete answers

BUSI 422 Read & Interact Brueggeman & Fisher Chapter 3 solutions complete answers

 

The IRR at 10% in year 1 if the investment is $3,000 is  .

 

You need money to make money

 

The recovery of investment will (blank) (reduce/increase) the initial investment balance each year.

 

Investing $14,285, letting it compound for one year, and receiving $15,000 is equivalent to earning a yield of 7%.

 

Suppose you deposit $500 in a bank account earning 6% interest. What is the value after one year?

 

Given an initial investment of $10,000 and a rate of return of 3% per year, what is the value of the investment after 4 years?

 

Suppose you make an investment of $100 at the beginning of the year and, at the end of the year, the value is worth $115. How much interest did you earn?

 

An interest rate factor is computed by taking the future value of $______________

 

The longer the time period invested, the (higher/lower) your value will grow.

 

Determine the future value of an investment of $10,000 at an annual rate of 7% over two years, with monthly compounding.

 

That you prefer $1 today to $1 in the future means money has ________ _________

 

Discounting is the ______ compounding.

 

To compute the future value of an annuity, take the ______________ of all deposits made and include compound interest on deposits when it is earned.

 

To compute the future value in Excel, use the function:

 

To compute the value of a   annuity, substitute i/12 in place of i and use the number of compounding periods per year. (Enter one word per blank.)

 

The present value of an annuity is a ______________ of annual income receipts.

 

True or false: Given a choice between receiving $1 today and $1 in one month, you would prefer to receive $1 in one month.

 

To discount instead of compound, one would take the ___________ of the interest factor for compounding.

 

Suppose you make deposits of $225 for each of the next five years. If you earn a return of 4% per year, what is the value of your account at the end of the fifth year?

 

To compute the value of a ____________ annuity, substitute i/4 in place of i and use the number of compounding periods per year. (Enter one word per blank.)

 

Many investments require a series of __________ which makes understanding the present value of a(n) ______________ important.

 

What is the annualized yield on an investment of $400 for five years compounded monthly? You will receive $539.54 at the end of the fifth year.

 

Suppose you will need $12,000 in ten years and can earn an annual rate of return of 9%. How much do you need to save each year to end with $12,000?

 

An investment yield is a _____.

 

Suppose you make an investment of $500 for seven years. At the end of seven years, you receive $750. What annual rate of return did you earn?

 

What is the annualized yield on an investment of $10,000 for three years compounded monthly? You will receive $12,702.37 at the end of the third year.

 

Suppose you make an investment of $500 for five years. At the end of five years, you receive $750. What annual rate of return did you earn?

 

Which of the following are needed in a compounding problem?

 

If the PV is 100, the interest rate is 7% per year, and the term is one year, the future value is  .

 

Mortgage loans can be compounded on a _______ basis

Mortgage loans can be compounded on a _______ basis.

 

How many basic components exist in a compounding problem?

 

The present value plus the interest earned during the year is equal to:

 

Determine the future value of an investment $10,000 at an annual rate of 7% over two years, with monthly compounding.

 

Suppose you make an investment of $100 at the beginning of the year and, at the end of the year, the value is worth $115. How much interest did you earn

 

The effective annual yield is a way to express a loan on an _______ basis.

The effective annual yield is a way to express a loan on an _____ basis.

 

Mortgage loans typically involve _______ compounding

 

Rank the following compounding intervals in the order of the effective annual yields. Place the compounding interval that provided the highest effective annual yield at the top.

 

The interest factor for the future value of $1 at 5% is ___

 

Which compounding period will result in a higher future value of an investment?

 

To compute the future value in excel, use the function:

 

What is the effective annual yield if you received $12,000 at the end of the year on a deposit of $11,750?

 

T/F: given a choice between receiving $1 today and $1 in one month, you would prefer to receive $1 in one month

 

Which of the following compounding period will result in the lowest EAY, assuming the same nominal annual rate of interest?

 

The future value of $100 deposited for three years compounded annually at 8 percent is  . (Round the final answer to two decimal places.)

 

A dollar _____ is worth more than a dollar received in the _______

 

That you prefer $1 today in the future means money has ____ _____

 

Discounting is the ____ compounding

 

What is the present value of $15,000 received in 3 years using a 4% discount rate?

 

An annuity must have:

 

A dollar today is worth ____ than a dollar in the future

 

Suppose you make deposits of $225 for each of the next five years. If you earn a return of 4% per year what is the value of your account at the end of the fifth year?

 

The present value of $10,000 received in 3 years using a 3% discount rate is  . (Round the final answer to two decimal places.)

 

Cash flows of $200, made each month, for the next four months are:

 

Suppose you are considering an investment that makes payments of $750 each year, for the next eight years. If you require a 7% return, what would you be willing to pay today?

 

With an accumulation of a future sum, you need to take into account that each payment will be accumulating _____ as they are deposited

 

Many investments require a series of ___ which makes understanding the present value of a(n) ___ important

 

Given the formula, FV = PV(1+r)^t, one can solve for any variable as long as ______ inputs are known.

 

Suppose you are considering an investment that makes payments of $500 each year, for the next six years. If you require a 4% return, you would pay   today (rounded to nearest whole dollar).

 

Suppose you will need $12,0000 in ten years and can earn an annual rate of return of 9%. How much do you need to save each year to end with $12,000

 

Suppose you make an investment of 500 for five years. At the end of the five years, you receive 750. What annual rate of return did you earn?

 

An investment yield is a _____

 

Investing $10,000, letting it compound for one year, and receiving $15,000 is equivalent to earning a yield of  %.

 

The irr at 10%, in year 1 if the investment is $3000 is

 

What is the annualized yield on an investment of $400 for five years compounded monthly? You will receive 539.54 at the end of the fifth year

 

What is the annualized yield on an investment of 10,000 for three years compounded monthly? You will receive 12702.37 at the end of the third year