How much would certainly $20,000 due in 50 years beworth now if the discount rate were 7.5%?


Suppose you have $2,000 and also arrangement to purchase a10-year certificate of deposit (CD) that pays 6.5% interemainder, compoundedevery year. How much will you have actually when the CD matures?


Last year Dania Corporation’s sales were $525million. If sales thrive at 7.5% per year, exactly how huge (in millions) will certainly they be 8years later?

$ 936.33

How much would $100, prospering at 5% per year,be worth after 75 years?


You deposit $500 this particular day in a savings accountthat pays 3.5% interest, compounded yearly. How a lot will your account beworth at the end of 25 years?


Suppose a State of The golden state bond will certainly pay$1,000 eight years from currently. If the going interemainder price on these 8-year bondsis 5.5%, exactly how a lot is the bond worth today?


How a lot would $5,000 due in 25 years be worththis day if the discount price were 5.5%?


Suppose an Exxon Corporation bond will pay$4,500 ten years from now. If the going interest price on safe 10-year bonds is4.25%, how a lot is the bond worth today?


Suppose the U.S. Treasury offers to offer you abond for $3,000. No payments will certainly be made until the bond matures 10 years fromcurrently, at which time it will be reconsidered for $5,000. What interest price would certainly youearn if you bought this bond at the market price?


Five years earlier, Weed Go Inc. earned $1.50 pershare. Its income this year were $3.20. What was the growth price in earningsper share (EPS) over the 5-year period?


Bob has $2,500 invested in a bank that pays 4%every year. How lengthy will it take for his funds to double?


You arrangement to invest in securities that pay8.0%, compounded yearly. If you invest $5,000 now, how many kind of years will ittake for your investment to thrive to $9,140.20?


You desire to buy a brand-new sporting activities auto 3 years fromcurrently, and also you plan to conserve $4,200 per year, start one year from today. Youwill deposit your savings in an account that pays 5.2% interest. How much willyou have actually simply after you make the third deposit, 3 years from now?


You desire to go to Europe 5 years from now, andyou can save $3,100 per year, beginning one year from this particular day. You arrangement todeposit the funds in a shared fund that you think will return 8.5% per year.Under these problems, just how a lot would certainly you have simply after you make the 5thdeposit, 5 years from now?


You desire to quit your task and return to schoolfor an MBA degree 3 years from now, and also you setup to conserve $7,000 per year,start immediately. You will certainly make 3 deposits in an account that pays 5.2%interemainder. Under these presumptions, exactly how a lot will you have actually 3 years from today?


What is the PV of an plain annuity through 5payments of $4,700 if the correct interemainder price is 4.5%?


You just inherited some money, and also a brokersupplies to offer you an annuity that pays $5,000 at the finish of yearly for 20years. You might earn 5% on your money in other investments with equal threat.What is the the majority of you should pay for the annuity?


What is the PV of an annuity due through 5payments of $2,500 at an interemainder price of 5.5%?


What’s the rate of rerotate you would earn ifyou phelp $950 for a perpetuity that pays $85 per year?


You have a chance to buy an annuity that pays$5,000 at the beginning of each year for 5 years. You could earn 4.5% on yourmoney in other investments via equal danger. What is the the majority of you should pay forthe annuity?


Your father is about to retire, and he wantsto buy an annuity that will administer him via $85,000 of revenue a year for 25years, with the initially payment coming instantly. The going rate on suchannuities is 5.15%. How a lot would certainly it cost him to buy the annuity today?


Suppose your credit card issuer claims that itcharges a 15.00% nominal yearly price, however you should make monthly payments, whichamounts to monthly compounding. What is the reliable annual rate?


You are considering investing in a bankaccount that pays a nominal annual rate of 7%, compounded monthly. If youinvest $3,000 at the end of each month, exactly how many kind of months will it take for youraccount to thrive to $150,000?


Your subscription to Investing Wisely Weeklyis around to expire. You arrangement to subscribe to the magazine for the rest of yourlife, and you can renew it by paying $85 every year, beginning automatically, oryou deserve to gain a lifetime subscription for $850, likewise payable instantly.Assuming that you can earn 6.0% on your funds and also that the yearly rejuvenation ratewill certainly remain continuous, exactly how many type of years should you live to make the lifetimesubscription the much better buy?


After graduation, you setup to job-related for DynamoCorporation for 12 years and also then begin your own service. You expect to saveand deposit $7,500 a year for the first 6 years (t = 1 through t = 6) and$15,000 annually for the complying with 6 years (t = 7 with t = 12). The firstdeposit will certainly be made a year from this day. In addition, your grandfather simply gaveyou a $25,000 graduation gift which you will deposit automatically (t = 0). Ifthe account earns 9% compounded each year, just how a lot will certainly you have actually as soon as you startyour service 12 years from now?


John and Daphne are saving for their daughterEllen’s college education and learning. Ellen just turned 10 (at t = 0), and she will certainly beentering college 8 years from now (at t = 8). College tuition and prices atState U. are currently $14,500 a year, yet they are intended to increase at arate of 3.5% a year. Ellen must graduate in 4 years⎯if she takes longer or wants to go to graduate school, she willbe on her own. Tuition and other expenses will be due at the start of eachschool year (at t = 8, 9, 10, and 11). So much, John and also Daphne have accumulated$15,000 in their college savings account (at t = 0). Their long-run financialarrangement is to add a secondary $5,000 in each of the following 4 years (at t = 1, 2,3, and also 4). Then they plan to make 3 equal annual contributions in each of thefollowing years, t = 5, 6, and 7. They intend their investment account to earn9%. How huge have to the annual payments at t = 5, 6, and 7 be to cover Ellen’santicipated college costs?


Starting to invest at an early stage for retirementreduces the benefits of compound interemainder.

You are watching: How much would $20,000 due in 50 years be worth today if the discount rate were 7.5%?


A time line is not coherent unless all cashflows take place annually.


Time lines cannot be created in situationswbelow some of the cash flows happen every year but others happen quarterly.


Time lines cannot be created for annuitiesunless all the payments take place at the finish of the periods.


Several of the cash flows displayed on a time linedeserve to be in the develop of annuity payments but none can be unalso amounts


If the discount (or interest) price ispositive, the future worth of an supposed series of payments will certainly always exceedthe present worth of the exact same series.


Disregarding hazard, if money has actually time value, itis difficult for the future worth of a provided sum to exceed its existing value.


If a bank compounds savings accountsquarterly, the efficient yearly price will certainly exceed the nominal price.


The higher the number of compounding periodswithin a year, then (1) the greater the future worth of a lump amount investmentat Time 0 and also (2) the smaller the current worth of a provided lump amount to begot at some future date.


Suppose Randy Jones plans to invest $1,000. Hedeserve to earn an effective yearly price of 5% on Security A, while Security B has anefficient yearly rate of 12%. After 11 years, the compounded worth of SecurityB should be rather much less than twice the compounded worth of Security A.(Ignore hazard, and also assume that compounding occurs each year.)


All other things held consistent, the presentvalue of a offered yearly annuity decreases as the number of periods per yearrises.


If we are given a periodic interest rate, saya monthly rate, we can find the nominal yearly price by multiplying the periodicrate by the variety of durations per year.


As a result of compounding, the effectiveyearly price on a bank deposit (or a loan) is always equal to or much less than thenominal rate on the deposit (or loan).


When a loan is amortized, a relatively lowpercentage of the payment goes to mitigate the superior principal in the earlyyears, and the major repayment’s percent increases in the loan’s lateryears.


The payment made each duration on an amortizedloan is constant, and it consists of some interest and also some principal. Thecloser we are to the end of the loan’s life, the smaller the portion of thepayment that will certainly be a repayment of major.

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As a result of compounding, the effectiveannual price on a bank deposit (or a loan) is always equal to or higher thanthe nominal rate on the deposit (or loan).


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