View the step-by-step solution to:

Question

# 1-​ (Solving for n​) How many years will it take for ​\$510 to grow to ​\$1 comma 065.01 if​ it's invested

at 10 percent compounded​ annually?

2-​ (Present value) Ronen Consulting has just realized an accounting error that has resulted in an unfunded liability of ​\$395 comma 000 due in 26 years. In other​ words, they will need ​\$395 comma 000 in 26 years. Toni​ Flanders, the​ company's CEO, is scrambling to discount the liability to the present to assist in valuing the​ firm's stock. If the appropriate discount rate is 8 ​percent, what is the present value of the​ liability?

3- Lance Murdock purchased a wooden statue of a Conquistador for \$ 7 comma 900 to put in his home office 6 years ago. Lance has recently​ married, and his home office is being converted into a sewing room. His new​ wife, who has far better taste than​ Lance, thinks the Conquistador is hideous and must go immediately. Lance decided to sell it on​ e-Bay and only received ​\$5 comma 500 for​ it, and so he took a loss on the investment. What was his rate of​ return, that​ is, the value of i​?

What was Lance​ Murdock's rate of​ return, that​ is, the value of i​? Enter a negative percentage for a loss.

4-You are offered ​\$120 comma 000 today or ​\$360 comma 000 in 13 years. Assuming that you can earn 13 percent on your​ money, which should you​ choose?

If you are offered ​\$360000 in 13 years and you can earn 13 percent on your​ money, what is the present value of ​\$360000​?

5- (Calculating an​ EAR) Your grandmother asks for your help in choosing a certificate of deposit​ (CD) from a bank with a​ one-year maturity and a fixed interest rate. The first certificate of​ deposit, CD​ #1, pays 4.95 percent APR compounded monthly​, while the second certificate of​ deposit, CD​ #2, pays 5.00 percent APR compounded quarterly. What is the effective annual rate​ (the EAR) of each​ CD, and which CD do you recommend to your​ grandmother?

if the first certificate of​ deposit, CD​ #1, pays 4.95 percent APR compounded monthly​, the EAR for the deposit is

### Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

### -

Educational Resources
• ### -

Study Documents

Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

Browse Documents