Hey Chegg, I need help with this question for finance. Could you show how you ar
ID: 2729398 • Letter: H
Question
Hey Chegg, I need help with this question for finance. Could you show how you arrived at the answers for questions 1 and 2 and please show work (step by step) so I can understand it clearly and be able to follow it. It is very important. Thank you.
C)
1. We have an investment of $15,000 on which we receive $1,000 yearly, as well as $20,000 7 years later. Compute the i on that investment.
2. We invest $10,000 for 10 years. We receive $14,000 10 years later. The i is 25% annually. What is the annual receipt we make?
Explanation / Answer
Answer 1.
Let interest rate be i%.
Initial Investment is $15,000 on which $1,000 yearly for 7 years and $20,000 after 7 years.
Therefore, 15,000 = 1,000/(1+i) + 1,000/(1+i)^2 + 1,000/(1+i)^3 + .. + 1,000/(1+i)^7 + 20,000/(1+i)^7
i = 10.16%
Answer 2.
Let x be the annual receipt.
Initial Investment is $10,000 and we will receive $14,000 after 10 years interest earned is 25%.
10,000 = x/1.25 + x/1.25^2 + x/1.25^3 + ... + x/1.25^10 + 14,000/1.25^10
8,496.76 = x / 0.25 * (1-(1/1.25)^10)
x = $2,379.71