Chapter 4: Question (page 281)
You invest $3,000 for three years at 12 percent. b. What is the value of your investment after two years?
Answer
The value of investment after two years is $3,763.20.
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What are the three factors that influence the required rate of return by investors?
What factors might influence a firm’s price-earnings ratio?
With inflation, what are the implications of using LIFO and FIFO inventory methods? How do they affect the cost of goods sold?
Question: What is the present value of a 10-year annuity of $3,000 per period in which payments come at the beginning of each period? The interest rate is 12 percent.
Your grandfather has offered you a choice of one of the three following alternatives: \(7,500 now; \)2,200 a year for nine years; or $31,000 at the end of nine years. Assuming you could earn 10 percent annually, which alternative should you choose? If you could earn 11 percent annually, would you still choose the same alternative?
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