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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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 Spring '11
 Tohmass
 Finance, Time Value Of Money, Interest, Mathematical finance, realworld financial issues

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