Rate of return on investment

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1. In 2,009, an 1880 silver dollar sold for $12,411. What was the rate of return on this investment? Answer as a decimal fraction to four decimal places - ie, if you get 8.23%, enter the answer as 0.0823.

2. You're trying to save to buy a new $139,299 Mercedes. You have $57,835 today that can be invested at your bank. The bank pays 3.63 percent annual interest on its accounts. How long will it be (in years) before you have enough to buy the car? Answer to two decimals.

3. ABC, Inc., has an unfunded pension liability of $635 million that must be paid in 18 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 9.79 percent, what is the present value of this liability? Answer in $ millions to two decimals - ie, if you get 12,345,678 dollars, you should enter 12.34.

4. You plan to make your first $7,936 contribution to your individual retirement account in 4 years. Assuming you earn a 8.05 percent rate of return and make no additional contributions, what will your account be worth (in $) when you retire 49 years from now?

5. You expect to receive $9,965 at graduation in 4 years. You plan on investing it at 8.35 percent until you have $169,743. How long will you wait (in years) from now? Answer to two decimals.

6. An investment offers to triple your money in 24 months. What rate (in percent) per three months are you being offered? Answer to two decimals.

7. You need $73,683 in 10 years. If you can earn 0.52 percent per month, how much will you have to deposit today (in $)? Answer to two decimals.

8. You have $64,527 you want to invest. You are offered an investment plan that will pay you 2.23 percent per year for the first 22 years and 4.76 percent per year for the last 25 years. How much will you have (in $) at the end of the two periods? Answer to two decimals.

Reference no: EM133116667

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