ch5 - 6 7 1 1 12 r3 14 P A RT 3 Valuation of Future Cash...

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Unformatted text preview: 6. 7. 1 1 . 12. r3. 14. P A RT 3 Valuation of Future Cash Flows Calculating Interest Rates Assume the total cost of a college education in Bangkok will be 250.000 baht when your child enters college in l8 years. You presently have 43,000 baht to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college education? Calculating the Number of Periods At 6 percent interest, how long does it take to double your money? To quadruple it? Calculating Interest Rates In 2003, the automobile industry announced the aver- age vehicle selling price in the United States was \$28,835. Five years earlier, the average price was \$21,608. What was the annual increase in vehicle selling price? Calculating the Number of Periods You're trying to save to buy a new € 150,000 Porsche. You have €40,000 today that can be invested at your bank. The bank pays 4.5 percent annual interest on its accounts. How long will it be before you have enough to buy the car'l...
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