REE chp.14

Jenny wants to go to Europe four years from now. She can save $4,000 per year, beginning one year from today. She plans to invest the funds in the S&P 500 index fund that she thinks will return 10% per year. Under these conditions, how much will she have saved after she makes the 4th deposit, 4 years from now?

$18,564

The average annual return for the S&P 500 since its inception in 1928 through 2014 is approximately 10%. assume a person invested $1.00 in S&P 500 Index in the end of 1928. It would have grown to _________ in the end of 2014

3628.87

A cash inflow or outflow that is forecasted to occur once over the analysis period, should be entered in the _________ register.

FV

A fixed (level) cash inflow or outflow (ex., monthly or annually) should be entered in the Multiple choice question. PMT register I register PV register FV register

PMT register

Calculation of the expected future value of a house in 5 years growing at an expected rate is called

compounding

The increase in the value of a one time (lump sum) investment that grows at a given rate will be greatest with __________ compounding. Multiple choice question. daily annual monthly quarterly

daily

True or false: An annuity due is defined as a fixed amount of money paid or received at the end of every period.

false

As the perceived risk of expected future cash flows increases,

he required (expected) return should increase

The compounding of interest causes the value of an investment to grow at an ________ rate

increasing