Calculate Rate of Return on Investments at a local TD Bank in Princeton, New Jer
ID: 2649060 • Letter: C
Question
Calculate Rate of Return on Investments at a local TD Bank in Princeton, New Jersey John Greenwald is considering an investment in Money Market Account with the following information: Which investment produce the higher return? YOU MUST SHOW YOUR CALCULATIONS: Present Value = $135,000 Future Value = $235,000 Compounding Frequency = Annually Annual interest rate = Present Value $275,000 Future Value = $495,000 Compounding Frequency = Annually Annual interest rate = _______________ Present Value = $715,000 Future Value = $1.035,000 Compounding Frequency = Semi-annually Annual interest rate = Present Value = $1,175,000 Future Value $2,195,000 Compounding Frequency = Quarterly Annual interest rate =Explanation / Answer
present value= $135,000, future value= $235,000 and the rate of return per annum=
= 235,000- 135,000= $100,000
in terms of per cent it is 100,000/135,000= 74%
2. present value $295,000, future value is $495,000. the return is = $495,000 - 295,000= $200,000
in terms of per cent it is = 200,000/295,000= 67.796%
3. present value= $715,000, future value is $1,035,000, the return is 1,035,000- 715,000= $320,000
in terms of per cent it is = $320,000/715,000= 44.75%, but the compounding frequency is halfyearly, so the rate of return is 44.75/2= 22.375%
4. the present value is $1,175,000 and future value is $2,195,000 and the return is $1020,000
in per cent = (1,020,000/1,175,000)/ 4= 21.7% per quarter
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