webcourses.ucf.edu What is The Future Value O Quiz 5 Time Value of Money: GEB300

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webcourses.ucf.edu What is The Future Value O Quiz 5 Time Value of Money: GEB3006-17Fall ORO1 0/1 pts nansweredQuestion 9 Assume you made an investment today for $35,000 and sold it seven years later for $28,000. What is your annual rate of return (with interest compounded annually)? -4.6% -2.6% Correct Answer O-3.1% Unanswered Question 10 0/ 1 pts You plan to buy some undeveloped land that should sell for $180,000 in three years, what is the most you can pay to ensure a 12% annual return? $150,953

Explanation / Answer

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

28000=35000(1+r/100)^7

(28000/35000)^(1/7)=(1+r/100)

(1+r/100)=0.968625

Hence r=(0.968625-1)*100

=(3.1%)(Negative)

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