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CFIN 3 Chapter 4 Questions and Answers – Updated 2024 $9.99   Add to cart

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CFIN 3 Chapter 4 Questions and Answers – Updated 2024

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CFIN 3 Chapter 4 Questions and Answers – Updated 2024 "If you invest $500 today in an account that pays 6 percent interest compounded annually, how much will be in your account after two years?" - Answer-nn Using a financial calculator, enter N = 2, I/Y= 6, and PV = -500; compute FV = 561.80...

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  • October 16, 2024
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CFIN 3 Chapter 4 Questions and Answers
– Updated 2024

"If you invest $500 today in an account that pays 6 percent interest compounded annually, how

much will be in your account


after two years?" - Answer✔✔-\n\n


Using a financial calculator, enter N = 2, I/Y= 6, and PV = -500; compute FV = 561.80"


"What is the present value of an investment that promises to pay you $1,000 in five years if you

can earn 6 percent interest


compounded annually?" - Answer✔✔-\n\n "


Using a financial calculator, enter N = 5, I/Y= 6, and FV = 1,000; compute PV = -747.26"


Compute the present value of $1,552.90 due in 10 years at (a) a 12 percent discount rate and

(b) a 6 percent rate. - Answer✔✔-Using a financial calculator, enter N = 10, I/Y= 6, and FV =

1,552.90; compute PV = -867.13


The present value represents the amount that needs to be invested today at the opportunity

cost rate to generate the future amount. In essence, we take the interest out of the future

value—that is, discount—to determine the current, or present, value. For this problem, then, if




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, EMILLECT 2024/2025 ACADEMIC YEAR ©2024 EMILLECT. ALL RIGHTS RESERVED FIRST PUBLISH OCTOBER, 2024


$867.13 is invested today at 6 percent compounded annually, it will grow to $1,552.90 in 10

years.


"To the closest year, how long will it take a $200 investment to double if it earns 7 percent

interest? How long will it take if the


investment earns 18 percent?" - Answer✔✔-\n\n "(1)


PV = -200 400


Using a financial calculator, enter I/Y= 7, PV = -200, PMT = 0, and FV = 400; compute N = 10.24 ≈

10 years


If I/Y= 18%, N = 4.19 ≈ 4 years"


Which amount is worth more at 14 percent: $1,000 in hand today or $2,000 due in six years? -

Answer✔✔-Using a calculator, enter N = 6, I/Y= 14, PMT = 0, and PV = -1,000; compute FV =

2,194.97


PV = 1,000(1.14)6 = 1,000(2.19497) = 2,194.97


$1,000 today is worth more. The future value of $1,000 at 14 percent over six years is

$2,194.97, which is greater than the future $2,000.00.


Alternatively, using a calculator, enter N = 6, I/Y= 14, PMT = 0, and FV = 2,000; compute PV = -

911.17


PV = 2,000(1/1.14)6 = 2,000(0.455587) = $911.17




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