22. How much money must be put into a bank account yielding 6.7% (compounded ann

Question

22. How much money must be put into a bank account yielding 6.7% (compounded annually) in order to have $1,324.63 at the end of 15 years? a. $500.76 b. $469.67 c.$447.39 d. $436.29 23. The return over the risk free rate demanded by the investor for bearing systematic risk is known as the: a. Discounted cash flow b. Time value of money c. Company specific risk d. Market risk premium 24. You purchased 500 shares of Kaldwin Inc. common stock one year ago for $30.86 per share. You received total dividends of S1.24 per share over the last year and decide to close out your position by selling at $31.62 per share. What is your holding period return? a. 6.48% b. 7.01% c. 7.72% d. 8.10% 25. Exactly 10 years ago, you deposited $2,500 into an account and promptly forgot about it. Today, you find the original confirmation letter while cleaning out your desk and decide to check your balance. After being put on hold for an hour with customer service and resetting your password twice, you find that your account has grown to $5,854! What is your annual rate of return over the last 10 years? a. 8.88% b. 7.92% c. 6.78% d. 6.09% Fin

Explanation / Answer

22) Using the formula - Present value or market value = C1/(1+r)n

FV = 1324.63 , N = 15, R = 6.7%

PV = 500.76 - Option A

23) The investor pays demands additional return for the company specific risk it bears

24) Purchase price = 500*30.86 = 15430

Dividends received = 500*1.24 = 620

Selling Price = 500*31.62 = 15810

Holding period return = (15810 + 620) / 15430 = 6.48%

25) Using the formula in 22

PV = 2500

FV = -5854

N = 10

Rate = 8.88%

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

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