Assignment 5 econ.docx

# Assignment 5 econ.docx - FNCE 5151 NAME NAME Assignment#5...

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FNCE 5151 NAME: ___________________________________________ NAME: ___________________________________________ Assignment #5 – Fall 2017 Fall 2017 – Due on or before 12/05/17: You can do this assignment alone or with one other student from the class. Each question worth 6.25 points. Partial credit will be given 1. Tim put \$275 in the bank one year ago and forgot about it. Today, the bank sent Tim a statement indicating that he now has \$294.25 in his account. What interest rate didTim earn? a. 5 percent b. 6 percent c. 7 percent d. 8 percent 2. You want to have \$100,000 in five years. If the interest rate is 8 percent, about how much do you need to have today? a. \$66,225.25 b. \$67,556.42 c. \$68,058.32 d. \$71,428.57 3)Many IRA funds argue that investors should invest at the beginning of the year ratherthan at the end. What is the difference to an investor (that is, what is the difference in FV) to an investor who invests \$2,500 per month at 10%, compounded monthly, over a 40-year period at the beginning of every month and an investor who invests on the same terms at the end of each month? How much in total did you put into the investment (your principal over 40 years)? 4) The earnings of Omega Supply Company have grown from \$2.13 per share to \$5.25 per share over a ten-year time period. To two decimal points, determine the compound annual growth rate.

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CAGR = [(Ending Value/Beginning value)^(1/# of years)] – 1= [(5.25/2.13)^(1/10)] – 1= 1.0944 – 1= 0.0944 = 9.44%In Excel,CAGR = RATE(10,,2.13,-5.25,,)= 9.44%
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