# DB 4 Ch 4 - you believe that you can earn 8 per year over...

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You are expected to post at least two messages (for two different topics/slides ) on the discussion board. You can: respond to the questions raised by the instructor; discuss real-world financial issues which are closely related to the topics; respond to the postings or questions raised by your classmates; pose a question for us relevant to our topics. A maximum of 15 points will be awarded for quality postings/ commentaries and responding to all questions. Responding to the minimum required two messages will result in a “C” type of grade or 10-11 points. Extra points at the end of the semester will be awarded for active reading and responding to ALL the discussion boards. Discussion boards such as this will always be posted on Tuesday of the week. Completion due date is always the coming Saturday, 8pm. 1-1

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1) What is the difference between simple interest and compound interest? 2) Suppose you have \$500 to invest and

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Unformatted text preview: you believe that you can earn 8% per year over the next 15 years. How much would you have at the end of 15 years using compound interest? How much would you have using simple interest? 2 3) What is the relationship between present value and future value? 4) Suppose you need \$15,000 in 3 years. If you can earn 6% annually, how much do you need to invest today? 3 5) Suppose you are offered the following investment choices: (i) You can invest \$500 today and receive \$600 in 5 years. The investment is considered low risk. (ii) You can invest the \$500 in a bank account paying 4%. What is the implied interest rate for the first choice and which investment should you choose? 4 Suppose you want to buy some new furniture for your family room. You currently have \$500 and the furniture you want costs \$600. If you can earn 6%, how long will you have to wait if you don’t add any additional money? 5...
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DB 4 Ch 4 - you believe that you can earn 8 per year over...

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