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August 24, 2020
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FINC 331 Week 3 Homework

Correct 94%

You have $300,000 that you want to invest in a one year Certificate of Deposit (CD) with a 4% annual interest rate. What will be the value of that CD in a year?

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Question 1 options:

$315,000wrong

$312,000

$420,000

$301,200

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Question 2 (1 point)

Which of the following is the correct formula for calculating future value with simple interest?

Question 2 options:

FV = PV * (1+i*t)

FV = PV * (1+i)t

FV = PV * i

All of these answers

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Question 3 (1 point)

You plan to invest $100,000 in a 3 year Certificate of Deposit that has a 5% compound interest rate. What is its future value?

Question 3 options:

$115,000

$115,763

$115,927

$105,000

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Question 4 (1 point)

You plan to invest $100,000 in a 3 year Certificate of Deposit that has a simple interest rate of 5%. What is its future value?

Question 4 options:

$115,000

$115,763

$115,927

$105,000

Save

Question 5 (1 point)

What is the future value in 30 years of $100,000 invested today in a savings account earning a 1% compound interest rate every year (rounded up to the nearest dollar)?

Question 5 options:

130000

134785

More than $134785

30000

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Question 6 (1 point)

What is the future value in 30 years of $100,000 invested today in a savings account earning a 1% simple interest rate every year (rounded up to the nearest dollar)?

Question 6 options:

30,000

130,000

134,785

More than $134,785

Save

Question 7 (1 point)

An annuity pays $1500 at the beginning of every month for five years. The interest rate of the annuity is 4%. What is this annuity’s future value?

Question 7 options:

$97,948

$101,280

$99,780

$99,448

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Question 8 (1 point)

A five year annuity pays $1000 at the end of every month for four years. It has an interest rate of 3%. What is its present value?

Question 8 options:

$26,024

$3,717

$3,828

$25,266

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Question 9 (1 point)

You purchase a two year annuity for $2800. The annuity pays $1500 each year. What is the annuity’s approximate IRR?

Question 9 options:

2.3%

4.5%

8.6%

10%

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Question 10 (1 point)

Which of the following correctly defines a method of determining a single period investment’s yield?

Question 10 options:

Annual Percentage Rate = (1+(i/N))^N – 1.

The Effective Annual rate is the interest rate multiplied by the number of payment periods per year.

Change-in-value equals the investment’s FV minus its PV. Divide that by PV and multiply by 100%.

All of these answers.

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Question 11 (1 point)

You can purchase two three-year annuities today. One is valued at $2000, the other at $4000. The 1st annuity begins paying $1000 in a year. The 2nd annuity begins paying $1500 in two years. The interest rate is 5%. What is the PV of the portfolio?

Question 11 options:

$808.12

$6613.60

$6808.12

$613.60

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Question 12 (1 point)

You purchase two annuities. The first is for three years and pays $1500 annually. The second is for four years and pays $2000 annually. The interest rate for both is 4%. What is the Future Value of this portfolio?

Question 12 options:

$12,612.90

$485.11

$506.74

$13,175.33

Save

Question 13 (1 point)

Which of the following is a cost to the investor that is included in the calculation of an investment’s interest rate?

Question 13 options:

All of these answers.

Inflation

Risk of a bad investment.

Opportunity Cost.

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Question 14 (1 point)

In a year, you expect to receive a payment of $1 million in a year. That annual interest rate is 5%. What is the present value of the future payment?

Question 14 options:

$952,381

$1,050,000

$995,025

$666,667

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Question 15 (1 point)

Assume you invest money in a bond that will pay you $250,000 in four years. The bond has an annual interest rate of 5%. You do not receive interest payments while you own the bond; it is zero-coupon. What is the bond’s present value?

Question 15 options:

$240,385

$205,482

$205,676

$238,095

Save

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