5. (10 points) Assume you will get $1000 one year from now. How much would you t

Question

5. (10 points) Assume you will get $1000 one year from now. How much would you take today, instead, if the interest is 6%? 6. (10 points) Two banks offer different interest rates on your deposit of $10,000 over 3 years. Bank A offers an 8% interest compounded annually and Bank B offers an 8.5% simple annual interest. Which bank will give you more money at the end of year 3, and how much is the difference? 7. (15 points) Which of the following different interest charging plans has the lowest annual interest rate? 1) 9% per year, compounded quarterly 2) 3% per quarter, compounded quarterly 3) 8.8% per year, compounded monthly 8. (10 points) An investor requires an effective return rate of 15% per year. What is the equivalent nominal rate that is acceptable (generates the same annual rate) if interest on his investment would be compounded continuously? 9. (15 points) What is the future value of a single $10,000 lump sum invested at a rate of 10% compounded monthly for 5 years?

Explanation / Answer

5.

Future value one year from today or FV=1000

r=6%

how much will you take today or PV=FV/(1+r)^n

=1000/(1+6%)^1

=943.40

the above is answer..

we do one question based on Chegg rule..

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