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Unformatted text preview: FNAN 301, Fall 2010, quiz 1, solutions FV of something in T that is worth a given amount in K 1. In 3 years from today, Clarisse plans to invest $13,500 in an investment that has a return of 6.4 percent per year. How much will Clarisse’s investment be worth in 9 years from today? 1. In 4 years from today, Clarisse plans to invest $13,700 in an investment that has a return of 6.4 percent per year. How much will Clarisse’s investment be worth in 9 years from today? 1. In 3 years from today, Clarisse plans to invest $15,400 in an investment that has a return of 7.3 percent per year. How much will Clarisse’s investment be worth in 9 years from today? 1. In 4 years from today, Clarisse plans to invest $15,600 in an investment that has a return of 7.3 percent per year. How much will Clarisse’s investment be worth in 9 years from today? Find present value or find cash flow needed to get a given future value 2. Hoda expects have $120,000 in her college account in exactly 3 years from today. Her account has returned and is expected to return 16.3 percent per year. If Hoda made a onetime investment 4 years ago, then how much did Hoda invest if she expects to meet her college savings goal of $120,000? 2. Hoda expects have $120,000 in her college account in exactly 3 years from today. Her account has returned and is expected to return 14.7 percent per year. If Hoda made a onetime investment 4 years ago, then how much did Hoda invest if she expects to meet her college savings goal of $120,000? 2. Hoda expects have $220,000 in her college account in exactly 3 years from today. Her account has returned and is expected to return 16.3 percent per year. If Hoda made a onetime investment 4 years ago, then how much did Hoda invest if she expects to meet her college savings goal of $220,000? 2. Hoda expects have $220,000 in her college account in exactly 3 years from today. Her account has returned and is expected to return 14.7 percent per year. If Hoda made a onetime investment 4 years ago, then how much did Hoda invest if she expects to meet her college savings goal of $220,000? 1 FNAN 301, Fall 2010, quiz 1, solutions Compare risk of a growing perpetuity, a single cash flow, and an investment with a given expected return 3. Investment A pays investors $1,000 in 5 years and has an expected return of 12.3%. Investment B is currently valued at $800 and pays investors $1,900 in 7 years. Investment C is currently valued at $700 and is expected to make annual payments that grow by 2.0 percent per year forever with the first of these infinite annual payments made in 1 year and be for $85. Which of the assertions is most likely to be true regarding the three investments? Recall that an investment’s expected return equals its discount rate....
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This note was uploaded on 02/03/2011 for the course FINANCE 301 taught by Professor Murray during the Spring '09 term at George Mason.
 Spring '09
 MURRAY

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