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kupik [55]
3 years ago
12

You invest all the money you earned during your summer sales job (a total of $45,000) into the stock of a company that produces

fat and carb-free Cheetos. The company stock is expected to earn a 14% annual return; however, 5 years later it is only worth $20,000. Turns out there wasn't as much demand for fat and carb-free Cheetos as you had hoped. What is the annual rate of return on your investment?
Business
1 answer:
erica [24]3 years ago
8 0

Answer:

The annual rate of return of the invesment will be -14,97%

Explanation:

The initial investment is 45.000 and after 5 years the value of the investment is only 20.000. Here we can see a destruction of value (20.000 < 45.000). In finance, the time takes an essential part in calculation, so through the interest rate we calculated how bad was the investment in annual terms. The formula is as follows: Final investment value=(Initial investment*(1+interest rate)^(total years)) in our case would be: 20.000=(45.000*(1+interest rate)^(5)) From this formula we got -14,97%

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An investor is short stock at $70. If the stock's market price is $40, and the investor anticipates the price will continue to d
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A. Buy a call

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if $5,000 is invested at 3.2% annual interest compounded semiannually, how much will the investment be worth in 10 years?
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The amount of money would be $6,851.2 in the account after 10 years.

<h3>What is Compound interest?</h3>

Compound interest is defined as interest paid on the original principal and the interest earned on the interest of the principal.

A = P(1+r/100)ⁿ

Where:

A = the future value of the investment or loan

P = the principal investment or loan amount

r = the interest rate (decimal)

n = the number of compound periods

As per the question, data will be given as:

p = $5,000

r = 3.2%

t = 10 years

A = P(1+r/100)ⁿ

Substitute the values of p,r, and t in the formula,

A = 5,000 (1 + 3.2/100)¹⁰

A = 5,000 (1 + 0.032)¹⁰

A = 5,000 (1.032)¹⁰

A = 6,851.2052

Rounded to the nearest cent

A = 6,851.2

Therefore, the amount of money would be $6,851.2 in the account after 10 years.

To learn more about Compound interest click here:

brainly.com/question/25857212

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