1. Future Value. what is the future value in six years of $1000 invested in an...

90.2K

Verified Solution

Question

Finance

1. Future Value. what is the future value in six yearsof $1000 invested in an account with a stated annual interest rateof 9 percent
a. compounded annually?
b. compounded semi annually?
c. compounded monthly?
d. compounded continuously?
e. why does the future value increase as the compounding periodshortens?
Q2. present value and break even interest. consider afirm with a contract to sell an asset for $115,000 three years fromnow. The asset cost $76,000 to produce today. Given a relevantdiscount rate on this asset of 13 percent per year, will the firmmake a profit on this asset? at what rate does the firm just breakeven?

Answer & Explanation Solved by verified expert

4.0 Ratings (697 Votes)

Calculate the future value if interest is compounded annually as follows Future value Present value 1 Interest ratenumber of periods 1000196 1000167710 167710 See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

1. Future Value. what is the future value in six yearsof $1000 invested in an account with a stated annual interest rateof 9 percenta. compounded annually?b. compounded semi annually?c. compounded monthly?d. compounded continuously?e. why does the future value increase as the compounding periodshortens?Q2. present value and break even interest. consider afirm with a contract to sell an asset for $115,000 three years fromnow. The asset cost $76,000 to produce today. Given a relevantdiscount rate on this asset of 13 percent per year, will the firmmake a profit on this asset? at what rate does the firm just breakeven?