Question #134233
1. Suppose you wish to invest N$2,000 today so that you have N$6,000 six years from now. What must the annual interest rate be to achieve your goal if interest is compounded monthly? [4]

2. Assume that the current rate of inflation on housing is estimated at 10% per annum. Lydia's house is currently valued at N$ 450 000.
(a) How much could you expect to sell it for in 5 years? [3]
(b) Is it worthwhile to sell your house now or in five years, justify your answer? [2]

3. You want to buy a cellphone at the end of the year which will cost you N$ 4500. Assume on 1 January 2020 you open up a Unit trust which pays 6.5% interest per month. How much should you invest (starting from January) to yield N$4500 in December 2020? [4]

4. According to a survey carried out in 2019, the biomass of crabs in a particular region was estimated to be 5 350 MT. In 2014, the biomass was estimated to be 3 897 MT. Calculate the annual rate of growth of the crab’s population? [4]
1
Expert's answer
2020-09-22T14:01:42-0400

1) 2000(1+r)72=60002000*(1+r)^{72}=6000

r-interest rate is compounded monthly.

r=0.0154r=0.0154

2) a) 450,0001.15=724,729.5450,000*1.1^5=724,729.5

b) If Lydia will reinvest this money with rate more than inflation, Yes, to sell hous now is worthwhile. Another situation it is not.

3) x(1+0.065)12=4500x*(1+0.065)^{12}=4500

x=2,113.57x=2,113.57

4) 3,897(1+r)5=5,3503,897*(1+r)^{5}=5,350

r=0.0654r=0.0654


Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be the first!
LATEST TUTORIALS
APPROVED BY CLIENTS