What annual rate of return does this imply

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Reference no: EM131891872

1. Assume you just deposited $8,500 into an account that earns interest of 6% per year, compounded annually. How many years will it take for your balance to reach $10,000?

2. I plan to deposit $250 into an account at the end of each month. The account earns 5% per year, compounded monthly. How many months will it take for my balance to reach $25,000?

3. In 1980, a gallon of gas cost $1.08. According to AAA, the national average was $2.22 per gallon in 2016. What was the average annual inflation rate in the price of gas?

4. You are evaluating an investment. It promises to pay you $1,000 one year from today, $2,000 two years from today, and $3,000 three years from today. If you require a rate of return of 9% on the investment, what is the most you would be willing to pay for it today?

5. Suppose you have been offered the opportunity to invest in a start-up business. The owners have asked you to invest $15,000 today. Based on their forecasts, they expect that your investment will be worth $40,000 in 7 years. What annual rate of return does this imply?

Reference no: EM131891872

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