What annual rate of return is earned on a $200 investment when it grows to $850 in 10 years?

An investor is considering the purchase of a small office building. The NOI is expected to be the following: Year 1, $232,000; Year 2, $242,000; Year 3, $252,000; Year 4, $262,000; Year 5, $272,000. T...

Definitions

Value of initial investment

Enter the amount of money you are investing.

Start Year

Enter the year in which the money was first invested.

End Year

Enter the future year on which you want to base your calculation.

Annual interest rate

Annual rate of inflation

Enter a projected annual rate of inflation. The default value (2.0%) equals the mid-point of the Bank's inflation-control target range. You may change this to any rate you wish.

Effect of inflation on value of initial investment

The value of the initial investment after the effects of inflation have been calculated, but excluding interest.

Total interest earned

The total amount of interest earned, before inflation.

Interest earned, after inflation

The total amount of interest earned, after the effects of inflation have been calculated.

Total future value

The total value of the investment after the effects of inflation on the principal and interest have been calculated.

Target future value of investment

Enter the future amount of money you want to have.

Current investment needed for future value

This displays the amount you would have to invest to achieve your future target, taking into account the effects of inflation.

45.Moving Cash FlowsWhat is the value in year 7 of a $700 cash flow made in year 3 whenthe interest rates are 10 percent?A.$478.11B.$980.00C.$1,024.87D.$1,364.10PV = 700, N = (7 - 3) = 4, I = 10, PMT = 0, CPT FV = 1024.87AACSB: AnalyticalBlooms: AnalyzeBlooms: ApplyDifficulty: 2 IntermediateLearning Objective: 04-05 Move cash flows from one year to another.Source: 4 - 25Topic: Moving cash flows46.Moving Cash FlowsWhat is the value in year 6 of a $900 cash flow made in year 4 whenthe interest rates are 8 percent?A.$1,044.00B.$1,049.76C.$1,332.00D.$1,428.19PV = 900, N = (6 - 4) = 2, I = 8, PMT = 0, CPT FV = 1049.76AACSB: AnalyticalBlooms: AnalyzeBlooms: ApplyDifficulty: 2 IntermediateLearning Objective: 04-05 Move cash flows from one year to another.Source: 4 - 25Topic: Moving cash flows4-54

We have textbook solutions for you!

The document you are viewing contains questions related to this textbook.

Fundamentals of Financial Management

Brigham

Expert Verified

Chapter 04 - Time Value of Money 1: Analyzing Single Cash Flows47.Moving Cash FlowsWhat is the value in year 15 of a $600 cash flow made in year 3when the interest rates are 4 percent?A.$374.76B.$888.00C.$960.62D.$1,080.57PV = 600, N = (15 - 3) = 12, I = 4, PMT = 0, CPT FV = 960.62AACSB: AnalyticalBlooms: AnalyzeBlooms: ApplyDifficulty: 2 IntermediateLearning Objective: 04-05 Move cash flows from one year to another.Source: 4 - 25Topic: Moving cash flows48.Solving for RatesWhat annual rate of return is earned on a $200 investment when itgrows to $850 in ten years?A.3.25%B.4.25%C.13.47%D.15.57%PV = -200, N = 10, PMT = 0, FV = 850, CPT I = 15.57AACSB: AnalyticalBlooms: AnalyzeBlooms: ApplyDifficulty: 2 IntermediateLearning Objective: 04-07 Compute the rate of return realized on selling an investment.Source: 4 - 29Topic: Solving for rates4-55

Chapter 04 - Time Value of Money 1: Analyzing Single Cash Flows49.Solving for RatesWhat annual rate of return is earned on a $5,000 investment when itgrows to $7,000 in six years?A.1.40%B.5.45%C.5.77%D.40.00%PV = -5000, N = 6, PMT = 0, FV = 7000, CPT I = 5.77AACSB: AnalyticalBlooms: AnalyzeBlooms: ApplyDifficulty: 2 IntermediateLearning Objective: 04-07 Compute the rate of return realized on selling an investment.Source: 4 - 29Topic: Solving for rates50.Solving for RatesWhat annual rate of return is earned on a $900 investment when itgrows to $2,500 in fifteen years?A.1.78%B.2.78%C.6.58%D.7.05%PV = -900, N = 15, PMT = 0, FV = 2500, CPT I = 7.05AACSB: AnalyticalBlooms: AnalyzeBlooms: ApplyDifficulty: 2 IntermediateLearning Objective: 04-07 Compute the rate of return realized on selling an investment.Source: 4 - 29Topic: Solving for rates4-56

Chapter 04 - Time Value of Money 1: Analyzing Single Cash Flows51.Solving for RatesWhat annual rate of return is earned on a $10,000 investment when itgrows to $15,000 in ten years?A.1.50%B.3.97%C.4.14%D.5.00%PV = -10000, N = 10, PMT = 0, FV = 15000, CPT I = 4.14AACSB: AnalyticalBlooms: AnalyzeBlooms: ApplyDifficulty: 2 IntermediateLearning Objective: 04-07 Compute the rate of return realized on selling an investment.Source: 4 - 29Topic: Solving for rates