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Investments in the stock market have increased at an average compound rate of about 10 per

Investments in the stock market have increased at an average compound rate of about 10 per

Investments in the stock market have increased at an average compound rate of about 10 percent per year since 1926.

- If you invested $1,000 in the stock market 50 years ago, how much would that investment be worth today?

- If your investment in 1926 has grown to $1 million, how much did you invest 50 years ago?

- What is the present value of the following cash-flow stream if the interest rate is 5%?

Year

Cash Flow

1

$200

2

$400

3

$300

- What is the present value of a 3-year annuity of $100 if the discount rate is 7%?

- Suppose you decide to put $1,000 every year for the next 5 years at 8% interest, starting today. How much money will you have saved 5 years later?

Year

Cash Flow

1

$200

2

$400

3

$300

 

Abhinav 04-Dec-2019

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