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For this question you can use the CAPM formula:
E(rs) = risk free + (market return - risk free rate)*(beta)
=4.5% + (10.8% - 4.5%) * 1.3
= 4.5% + 8.19%
= 12.69%
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Answer:
I think is primary.......
Answer:
$1,666,666.67
Explanation:
This is a time value of money(TVM) question specifically, a perpetuity.
Use the formula for present value of perpetuity to solve it. It is as follows;
PV or perpetuity = Recurring cashflow / interest rate
PV = CF / r
Recurring annual cashflow ; CF = 100,000
rate; r = 6% or 0.06 as a decimal
PV = 100,000 / 0.06
PV = 1,666,666.667
Therefore, your parents will deposit $1,666,666.67 today
Principal Amount P = $ 48000
Rate of interest r = 6% = 0.06
Time interval t = 7
Formula for Interest I = P x r x t => I = 48000 x 0.06 x 7 => I = 2880 x 7
Total Interest for seven years would be $20,160
