Chap4_Graded

Chap4_Graded - Homework Manager - Corporate Finance...

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Question 1: Score 0/1 Your response Correct response Calculating Rates of Return In 2005, a gold $3 coin minted in 1881 was auctioned for $9,500. For this to have been true, the annual increase in the value of the coin was (0%) percent. (Input answer as a percent rounded to 2 decimal places, without the percent sign.) Calculating Rates of Return In 2005, a gold $3 coin minted in 1881 was auctioned for $9,500. For this to have been true, the annua the value of the coin was 6.72 with a tolerance of ± 1.0% percent. (Input answer as rounded to 2 decimal places, without the percent sign.) Total grade: 0.0×1/1 = 0% Feedback: To answer this question, we can use either the FV or the PV formula. Both will give the same answer since they are the inverse of each other. We will use the FV formula, that is: FV = PV(1 + r ) t Solving for r , we get: r = (FV / PV) 1 / t – 1 r = ($9,500 / $3) 1/124 – 1 r = 0.0672 or 6.72% Question 2: Score 0/1 Your response Correct response Calculating Future Values You have $8,300 to deposit. Regency Bank offers 15 percent per year compounded monthly (1.25 percent per
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Chap4_Graded - Homework Manager - Corporate Finance...

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