Chapter 5 Assignment \"zMindTap . Cengage Learning C Consider The Following Cas
ID: 2819616 • Letter: C
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Chapter 5 Assignment "zMindTap . Cengage Learning C Consider The Following Cas The CFO Of The Com iie https/ngcengagecom/statonbuu evo indexhtml?deploymentld-5516512150 MINDTAP From Cengage Chapter 5 Assignment Attempts: 4. Finding the interest rate and the number of years The future value and present value equations also help in finding the interest rate and the number of years that Keep the Highest: 13 A AaE correspond to present and future value calculations. If a security currently worth $9,200 will be worth $12,925.34 three years in the future, what is the implied interest rate the investor will earn on the security-assuming that no additional deposits or withdrawals are made? 12.00% 0 0.47% 9.60% 1.41% If an investment of $40,000 is earning an interest rate of 12.00%, compounded annually, then it will take this investment to reach a value of $93,582.61-assuming that no additional deposits or withdrawals are made during this time. following statements is true-assuming that no additional deposits or withdrawals are made? An investment of $25 at an annual rate of 10% will return a higher value in annual rate of 5% in the same time. An investment of $50 at an annual rate of 5% will retum a higher value in five years than$25 invested at an annual rate of 10% in the same time. five years than $50 invested at an O Type here to search nspirorExplanation / Answer
4) The correct answer is 12%
The future value of investment is calculated as follows
FV = Present value ( 1+interest rate)n
$ 12,925.34 = $ 9200 (1+r)3
(1+r)3 = 1.4049
r = 12%
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The future value of investment is calculated as follows
FV = Present value ( 1+interest rate)n
$ 93,582.61 = $ 40,000 (1+0.12)n
(1+0.12)n = 2.339565
n ln 1.12 = ln 2.339565
n = 7.50 years
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The Tue statement is :- An investment of $ 50 at an annual rate of 5% will return a higher value in 5 years than $ 25 invested at an annual rate of 10% in the same time.
Future value of investment of $ 25 at an annual rate of 10% in 5 years = $ 25 (1+0.10)5
Future value of investment of $ 25 at an annual rate of 10% in 5 years = $ 40.26
Future value of investment of $ 50 at an annual rate of 5% in 5 years = $ 50 (1+0.05)5
Future value of investment of $ 50 at an annual rate of 5% in 5 years = $ 63.81
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