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    Tutorial Simple Interest & Rate of Return

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    Ne Pa
    The document provides examples of calculating simple interest, future value, rates of return, and real rates of return over various time periods for different principal investment amounts and interest rates. It asks the reader to calculate things like the total amount after investing $1,000 at 5% for 3 years, the future value of $2,000 invested at 8% for 3 years, and the annual rate of return for an investment of $10,000 that yields $17,000 after 8 years.

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    Tutorial Simple Interest & Rate of Return

    Uploaded by

    Ne Pa
    30 views1 page
    The document provides examples of calculating simple interest, future value, rates of return, and real rates of return over various time periods for different principal investment amounts and interest rates. It asks the reader to calculate things like the total amount after investing $1,000 at 5% for 3 years, the future value of $2,000 invested at 8% for 3 years, and the annual rate of return for an investment of $10,000 that yields $17,000 after 8 years.

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    TUTORIAL WEEK 3

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    The document provides examples of calculating simple interest, future value, rates of return, and real rates of return over various time periods for different principal investment amounts and interest rates. It asks the reader to calculate things like the total amount after investing $1,000 at 5% for 3 years, the future value of $2,000 invested at 8% for 3 years, and the annual rate of return for an investment of $10,000 that yields $17,000 after 8 years.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    30 views1 page

    Tutorial Simple Interest & Rate of Return

    Uploaded by

    Ne Pa
    The document provides examples of calculating simple interest, future value, rates of return, and real rates of return over various time periods for different principal investment amounts and interest rates. It asks the reader to calculate things like the total amount after investing $1,000 at 5% for 3 years, the future value of $2,000 invested at 8% for 3 years, and the annual rate of return for an investment of $10,000 that yields $17,000 after 8 years.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    TUTORIAL SIMPLE INTEREST & RATE OF RETURN

    1. What is the total amount accumulated after three years if someone invests $1,000 today
    with a simple annual interest rate of 5 percent?

    2. Calculate the future value of $2000 after three years if the appropriate interest rate is 8
    percent?
    3. Muskan deposits $10,000 today and is promised a return of $17,000 in eight years. What
    is the annual rate of return?
    4. What will $1,000 be worth at the end of one year when the annual interest rate is 12%?

    5. How much should you pay for an investment that pays $1,500 per year for the next three years
    and then $2,000 per year for the following two years? Assume a discount rate of 15% per year?

    6. An investor deposits £1,000 into an account that pays interest of 9%. What is the value of
    the account at the end of six years?

    7. Your client invests $2 million in a security that matures in 4 years and pays 7.5 percent
    annual interest rate. Assuming no interim cash flows, which of the following will most likely be
    the value of the investment at maturity?

    8. Your client deposits $5 million in a savings account that pays 5 percent per year. What
    will be the value of this deposit after 2.5 years?

    9. Mr X plans to invest $12 million. The rate of return has been estimated at 8 percent per
    year. What is the future value of this investment 11 years from now?

    10. You invest $50,000 for three years that will earn 3.6 percent annually. What will be the
    value of your investment after three years?

    11. Last year an investor received $500 income from a $10,000 investment and sold the investment at
    the end of the year for $11,000. What was the investor's annual rate of return?

    12. If the average rate of return on large company common stock has been 13% over the last sixty
    years, while inflation averaged 3.2% over the same period, what real rate of return did investors in a well
    diversified large company stock portfolio earn?

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