Whats the discount rate that would make you indifferent

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Reference no: EM131905206

1) You will need $720 in 4 years for a vacation. If you earn 3% interest on your funds, how much will you need to invest today in order to reach your savings goal?

$700
$720
$639.71
$633.60

2) If you earn 5% per year on your bank account, how long will it take to double your money?

5 years
10.4 years
not enough information
14.2 years

3) In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $20,000 and the interest rate is 10%, the borrower "pays" 0.10 × $20,000 = $2,000 immediately, thereby receiving net funds of $18,000 (=$20,000-$2,000) and repaying $20,000 in a year. What is the implied rate on this loan?

10%
9.5%
11.1%
20%

4) What's the discount rate that would make you indifferent between these two options: $5,000 in year 2 vs. $20,000 in year 30? (Answer without percentage sign and round to 2 decimal places)

Reference no: EM131905206

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