Problem
You have $1,500 to invest today at 7% interest compounded over 3 years.
1) Calculate how much you will have accumulated in the account at the end of 3 years if the interest is compounded annually, semiannually, and monthly.
2) Compare the results obtained and explain in which one you received the greatest interest benefit and why.
3) What single investment made today, earning 12% annual interest, will be worth $6,000 at the end of 6 years?
4) What is the present value of the $6,000 to be received at the end of 6 years if the discount rate is 12%?
5) What is the highest amount you would pay today for the promise to pay $6,000 at the end of 6 years if your opportunity cost is 12%?
6) Compare and analyze the results obtained in the previous sections.
7) If the price of Coca Cola (KO) on the Yahoo page reads like this as of 12/4/2013: What was the stock's closing price for the previous day?
8) What is the current share price?