The amount of money that I would have in the bank account at the end of one year is $1,100.
The real interest rate I would expect to earn on the deposit is 6%.
If I am saving for a gaming computer, at the end of next year I would have enough money.
<h3>What is the value of the money by next year?</h3>
The formula that can be used to determine the money in my bank account next year is:
FV = P (1 + r)^n
Where:
FV = Future value
P = Present value
R = interest rate
N = number of years
1000 x (1.1)^1 = $1,100
<h3>What is the real interest rate?</h3>
The real interest rate is the nominal interest rate less inflation rate.
The real interest rate = 10% - 4% = 6%
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Answer:
12.64 years
Explanation:
Coupon rate is 7%
Current yield is 6.55%
Then the current price = 7 / 0.0655 = $106.87 per $100 par value.
Now calculating the no of years these bonds have left until they mature:
106.87 = 7*PVIFA(6.2%,n) + $100*PVIF(6.2%,n)
N = 12.64 years
Answer:
The required return on equity is 17%.
Explanation:
The required rate of return is the minimum return required by the investors to invest in a stock. The required rate of return is calculated under the CAPM approach based on the the stock's beta, the risk free rate and the market risk premium. The formula for the required rate of return is,
r = rRF + beta * rpM
r = 0.05 + 1.5 * 0.08
r = 0.17 or 17%
The name earth derived from the eighth century Anglo-Saxon word erda, which means ground or soil.