i need help with the mini case "investing in gold". it starts on the left hand side and ends on the right hand page, with the questions. Question A is "Compute the rate of return in gold prices that occurred during the three weeks between the last day of 1979 and the January 21, 1980 peak."

Question B is "by the end of 1980, gold had dropped to $589.75 per ournce. Compute the rate of return from the peak to the end of 1980.

Question C is "Imagine that you invested $1000 in gold at the end of 1999. Use the returns in Table 4.5 to determine the value of the investment at the end of 2015.

Are you able to see the related graphs in the photo I submitted?

TABLE 4.5 Annual Gold Returns Since 1975 research it! Stock Markel ILI What kind of neturns might you expect in the stock market? One way to measure how the stock market has performed is to examine the rate of return of the S&P 500 Index To see historical prices of the S&P 500 Index. go to Yahoo! Finance (finance.yahoo .com) and click on the SOP 500" link on the top left-hand side. Then click "Historical Prices on the left menu, select Monthly prices, and click the "Get Prices" button You can download to a spreadsheet using the button at the bottom of the data page: Compute the 1-year, 5-year, and 10-year returns over time. What do you conclude Annual Gold Return 19.30 4 10 2264% 37015 126 55 15.195 -32.60 6 7 8 about the returns during each of these periods? 14.94 A Year 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 Year 1996 1992 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 10 11 12 - 15 31 -19.19% 5 68 Annual Gold Return abon -210 -0813 085 5 44 0.75 2557 19 B9 4.65 17 77% 23 2013 31922 4.32 25.045 29 24% 8.933 8.26% -27 33% 0.12% - 11.875 integrated mini-case Investing in Gold 21.311 22 213 - 15269 2009 discovered gold jewelry in Southern Irag dating to 3000 BC and gold ornaments in Peru People have had a fascination with gold for thousands of years. Archacologists have dating to 1200 BC. The ancient Egyptians were masters in the use of gold for jewelry ornaments, and economic exchange. By 1000 BC, squares of gold were a legal form of money in China. The Romans issued a popular gold coin called the Aureus (aureus is the Latin word for gold). By AD 1100, gold coins had been issued by several European countries. Gold has been a highly sought-after asset all over the world and has always 15 16 17 18 19 20 21 22 -2.84 -1.47% -10.075 -5.75% 17.68 -2.179 0.995 2010 2011 2012 2013 2014 2015 Data Source: Kitco www kitco.com retained at least some economic value over thousands of years. The United States has had a very chaotic history with gold. For example, in the Great Depression, President Franklin D. Roosevelt banned the export of gold and ordered U.S. citizens to hand in all the gold they possessed. It was not until the end of 1974 that the ban on gold ownership by U.S. citizens was lifted. By 1986, the U.S. government's attitude on gold ownership had completely turned around, as evidenced by the resumption of the U.S. Mint's production of gold coins with the American Eagle. However, U.S. investors have little more than 30 years of gold-investing experience. Figure 4.5 shows how the price of gold per ounce has changed since 1974. These end-of-December prices do not illustrate the true magnitude of the bubble in gold prices that occurred in 1980. The price of gold increased from $512 at the end of 1979 to a peak of $870 on January 21, 1980. The subsequent crash in the price of gold was just as spectacular. The annual returns of gold are shown in Table 4.5. Gold prices have been very volatile, increasing dramatically for one or two years and then experiencing significant declines the next year or two. a. Compute the rate of return in gold prices that occurred during the three weeks between the last day of 1979 and the January 21, 1980, peak. b. By the end of 1980. gold had dropped to $589.75 per ounce. Compute the rate of return from the peak to the end of 1980. c. Imagine that you invested $1.000 in gold at the end of 1999. Use the returns in Table 4.5 to determine the value of the investment at the end of 2015. FIGURE 4.5 December Gold Prices since 1974 1.800.00 ANSWERS TO TIME OUT 1,600.00 Data Source Kitco (www.kitco.com) 1,400.00 - 1.200.00 1,000.00 Gold Price per Oz. ($) 4-1 Positive interest rates in the economy mean that $1 deposited today would return more than $1 in the future. To return $1 in the future, deposit less than $1 today. Thus, $1 received one year from now is worth less than $1 today. 4-2 Cash flow accounting labels money spent as a negative cash flow for the firm. This type of cash flow is put in the debit column. When cash is received, it is added as a positive cash flow and registered as a credit Investments, deposits, and loans all include one cash flow where money leaves your (or the firm's) hands and one cash flow where money goes into your hands 4.3 Period 0 6% 1 year 800.00 Gold peaked at $870.00 during trading on January 21, 1980 600.00 400.00 - 200.00 Cash flow $200 -$212 0.00 4-4 1974 1978 1998 2014 The principal in an investment or debt increases over time by the interest rate However, compounding causes interest to be earned on money that was previously earned as interest. So, wealth is built from both the principal earning profits and prior profits earning additional profits. If this is a debt whose interest payments are not being paid but added to the principal, then the debt will increase in the same way. Year 136