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# A How long will it take to triple your money with an interest rate

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a. How long will it take to triple your money with an
interest rate of 10 percent? b. On the advice of your broker
ten years ago, you invested in a \$6 stock that is now
selling for \$30. At what rate has your capital grown? c.
Your father is about to retire. His firm has given him the
option of retiring with a lump sum of \$50,000 or an annuity
of \$8,000 for ten years. Which is worth more now, if the
discount rate is (1) 6%, (2) 18%? d. You are offered a
\$15,000 life insurance policy requiring thirty annual
payments of \$195 each. What is the compound value of the
payments that you will have made after the policy is paid
up, assuming that the discount rate is 10 percent?
Solution
a.
b. Calculation of rate.
. C.
Lumpsum payment = \$50,000
Annuity @8% = \$8,000 x 7.36 = \$58,880
Annuity @18% = \$8,000 x 4.49 = \$35,920
Annuity @8% is more worthy.
D.YearPrincipleRate of InterestInterest amountAmount1
1.0010.00% 0.10 1.102

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a. How long will it take to triple your money with an interest rate of 10 percent? b. On the advice of your broker ten years ago, you invested in a \$6 stock that is now selling for \$30. At what rate has your capital grown? c. Your father is about to retire. His firm has given him the option of retiring with a lump sum of \$50,000 or an annuity of \$8,000 for ten years. Which is worth more now, if the discount rate is (1) 6%, (2) 18%? d. You are offered a \$15,000 life insurance policy requiring thirty an nual payments of \$195 each. What is the compound value of the payments that you will have mad ...
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