NC STATE Courses 2017-2018 omin 11 Suppose, the annual, t of $1,000 the largest
ID: 1108203 • Letter: N
Question
NC STATE Courses 2017-2018 omin 11 Suppose, the annual, t of $1,000 the largest -nae is 345%. In which of the folowng r stances isthe future value of the present payment Ponts out of Select one: A. In 7 years B. In 5 vears C. In 1 y D. In 3 yr Question 12 Which of the following describes the difference between compounding and discounting? Points out of Select one: o A. Discounting involves the assumption thet the interest rate is zero, whereas compounding does not involve thet B. Compounding produces a present value, whereas discounting produces a future value C. Compoudng involves the assumption that the nterest rate is zero, whereas discount ng does not nove that D. Compounding produces a future value, whereas discouning produces a present value Gueation 13 You consider whether to buy a bond that would pay $20,000 n 4 years. only it its price today is no greater than the interest rates 6%, you wil buy the bond 3 5 6Explanation / Answer
11.
7 years
the above is answer as more number of years, the value will be higher as you earn interest for more time adding to your future value.
12.
D option
the above is the answer
13.
Value today=20000/1.06^4
=15841.87
the above is the answer
14.
value as of today=1500*1.05^2*1.06
=1752.98
the above is the answer
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