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quiz%201%20solutions%202010%201%20spring

# quiz%201%20solutions%202010%201%20spring - FNAN 301 Spring...

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FNAN 301, Spring 2010, quiz 1, solutions Quantitative: simple and compound interest 1. Snooki just invested \$1,400 for 9 years and will earn compound interest of 6.0 percent per year. Today, Vinny can make an investment and earn simple interest of 6.0 percent per year. If Vinny wants to have just as much in 9 years as Snooki will have in 9 years, then how much should Vinny invest today? 1. Snooki just invested \$1,500 for 9 years and will earn compound interest of 7.0 percent per year. Today, Vinny can make an investment and earn simple interest of 7.0 percent per year If Vinny wants to have just as much in 9 years as Snooki will have in 9 years, then how much should Vinny invest today? 1. Snooki just invested \$1,400 for 9 years and will earn compound interest of 7.0 percent per year. Today, Vinny can make an investment and earn simple interest of 7.0 percent per year. If Vinny wants to have just as much in 9 years as Snooki will have in 9 years, then how much should Vinny invest today? 1. Snooki just invested \$1,500 for 9 years and will earn compound interest of 6.0 percent per year. Today, Vinny can make an investment and earn simple interest of 6.0 percent per year. If Vinny wants to have just as much in 9 years as Snooki will have in 9 years, then how much should Vinny invest today? Quantitative: basic future value problem 2. Danny owns a beach house on the Jersey Shore that is currently worth \$600,000. If he plans to sell the beach house in 5 years from today and the cost of capital is 8.4 percent, then what is the value of the beach house expected to be in 5 years from today? 2. Danny owns a beach house on the Jersey Shore that is currently worth \$650,000. If he plans to sell the beach house in 5 years from today and the cost of capital is 7.6 percent, then what is the value of the beach house expected to be in 5 years from today? 2. Danny owns a beach house on the Jersey Shore that is currently worth \$700,000. If he plans to sell the beach house in 5 years from today and the cost of capital is 7.3 percent, then what is the value of the beach house expected to be in 5 years from today? 2. Danny owns a beach house on the Jersey Shore that is currently worth \$750,000. If he plans to sell the beach house in 5 years from today and the cost of capital is 5.4 percent, then what is the value of the beach house expected to be in 5 years from today? 1

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FNAN 301, Spring 2010, quiz 1, solutions Conceptual and quantitative: present value
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