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Unformatted text preview: F301 – Fall 2010 Page 1 of 5 F301  Financial Management 2010 Fall Problem Set 1 Solutions Total possible points = 36 1. ( Solve this problem using the y x key on your calculator, NOT the TVM keys. Show your work by writing out your calculations. ) You invested $3,000 in a mutual fund four years ago. The return on your mutual fund has been 11% per year. How much is in there now, at the end of four years? (3 points) ¡ ¢ £¡ ¤ (¥ ¦ §) ¨ © ¢ ª««« ¤ ¥¬¥¥ © ¢ ®¯° ±±¯¬ ²³ 2. ( Solve this problem using the y x key on your calculator, NOT the TVM keys. Show your work by writing out your calculations. ) A real estate developer purchased a parcel of land in August 2005 for $540,000. Today, five years later, she sold the property for $685,590. What was the rate of return per year? (3 points) £¡ ¢ ¡ (¥ ¦ §) ¨ © (¥ ¦ §) ´ ¢ ¡ £¡ © ¢ µ¶·°·¸« ·¹«°««« © ¥ ¦ § ¢ º µ¶·°·¸« ·¹«°««« » ¼¬½ © ¥ ¦ § ¢ ¥¬«¹¶¸© ¾ ¢ ¯¬ ¿ÀÁ 3. ( Solve this problem using the y x key on your calculator, NOT the TVM keys. Show your work by writing out your calculations. ) Two years ago, I placed $5,000 in a risky hedge fund investment. In its first year, the value of my investment declined by 11.4% (a negative rate of return). In the second year, it earned a positive return of 2.4%. What was the average annual rate of return over the twoyear period? (Hint: First find the value at the end of the second year. Then use this value as the FV to find the annual rate of return.) (3 points) ¡©ÂÃ©ÄÅÆ©ÇÈ©ÉÄÂ§©Ê ¢ ·««« ¤ Ë¥ ¦ (Ì¬¥¥¹)Í ¤ (¥ ¦ ¬«Ê¹)© ¢ ·««« ¤ ¬¶¶µ ¤ ¥¬«Ê¹© ¢ ¹°·ªµ¬ªÊ F301 – Fall 2010 Page 2 of 5 ( ¡ ¢) £ ¤ ¥¦ §¦ ¨ ( ¡ ¢) © ¤ ª«¬®¬¯ «°°° ¨...
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This note was uploaded on 01/13/2011 for the course BUS A202 taught by Professor Tindall during the Spring '10 term at IUPUI.
 Spring '10
 TINDALL
 Management

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