1. You have an investment opportunity that promises to pay you $20,000 at a future date. You can earn 5% compounded semiannually on similar investments. How much would you be willing to invest assuming you will receive the amount at the end of (a) three years, (b) four years, or (c) five years? Formulas should include the =FV function and return a POSITIVE value. Future value Additional amount received at the end of each semiannual period Interest rate Compounded semiannually Investment Term 3 Years 4 Years 5 Years Present Value Investment Term 3 Years 4 Years 5 Years 2. If, in addition to the $20,000 future value, you receive an additional $1,000 at the end of each semiannual period, how much would you be willing to invest assuming the investment spans (a) three years, (b) four years, or (c), five years? Formulas should include the =FV function and return a POSITIVE value. Additional amount received at the end of each semiannual period $20,000 $0 5% 2 Compounding periods per year Present Value $1,000
1. You have an investment opportunity that promises to pay you $20,000 at a future date. You can earn 5% compounded semiannually on similar investments. How much would you be willing to invest assuming you will receive the amount at the end of (a) three years, (b) four years, or (c) five years? Formulas should include the =FV function and return a POSITIVE value. Future value Additional amount received at the end of each semiannual period Interest rate Compounded semiannually Investment Term 3 Years 4 Years 5 Years Present Value Investment Term 3 Years 4 Years 5 Years 2. If, in addition to the $20,000 future value, you receive an additional $1,000 at the end of each semiannual period, how much would you be willing to invest assuming the investment spans (a) three years, (b) four years, or (c), five years? Formulas should include the =FV function and return a POSITIVE value. Additional amount received at the end of each semiannual period $20,000 $0 5% 2 Compounding periods per year Present Value $1,000
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 16P
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