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(Solved by Expert Tutors) (A) Future value with changing years: Dixie bank offers a certificate


of deposit with an option to select your own investment period. Jonathan has $7, 000 for his CD investment. If the bank is offering a 6% interest rate, compounded annually, how much will the CD be worth at maturity if Jonathan picks a;
(i) Two year investment period
(ii) Five year investment period
(iii) Eight year investment period
(iv) Fifteen year investment period.


(B) Future Value With Changing Interest Rates: Jose has $4, 000 to invest for a 6 year period.He is looking at 4 different choices. What will be the value of his investment at the end of 6 years for each of the following potential investments;
(i) Bank CD at 3%
(ii) Bank funds at 7.5%
(iii) Mutual stock bonds at 11%
(iv) New venture stock at 23%.


(C) Future Value: Jackson enterprises has just spent $280, 000 to purchase land for a future beach front property development project that will include rental cabins, lodge and recreational facilities. Jackson Enterprises has not committed to the development project but will decide in five years whether to go forward with the project or sell off the land. Real estate values increase annually at 3% for unimproved property in this area. For how much can Jackson enterprises expect to sell the property in five years if it chooses not to proceed with the beach front development project? What if Jackson Enterprises holds the property for 10 years and then sell?

 


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Apr 19, 2020

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