3. chin is considering an investment that pays 6.80 percent. How much will he ha

Question

3. chin is considering an investment that pays 6.80 percent. How much will he have to invest today so that the investment will be worth $22,000 in six years? (If you solve this problem with algebra round intermediate calculations to 4 decimal places, in all cases round your final answer to the nearest penny.)

4. Your brother has asked you for a loan and has promised to pay back $9,000 at the end of three years. If you normally invest to earn 7 percent per year, how much will you be willing to lend to your brother? (If you solve this problem with algebra round intermediate calculations to 4 decimal places, in all cases round your final answer to the nearest penny.)

Explanation / Answer

Answer:3

Value of investment after 6 years = FV5= $22,000

Return expected from investment =i= 6.8%

Duration of investment =n= 6 years

Amount to be invested today = PV

PV=FVn/(1+i)n

=$22000/(1.068)6

=$14825.016

Answer:4 Loan repayment amount after 3 years = FV3= $9000

Return expected from investment = i = 7%

Duration of investment = n = 3 years

Amount to be invested today = PV

PV=FVn/(1+i)n

=$9000/(1.07)3

=$7346.681

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.