### Account earning an interest rate

Assignment Help Financial Management
##### Reference no: EM132049826

1. Your aunt places \$10,000 into an account earning an interest rate of 3% per year. After 5 years the account will be valued at \$11,592.74. Which of the following statements is correct? A) The present value is \$10,000, the time period is 3 years, the present value is \$11,592.74, and the interest rate is 5%. B) The future value is \$10,000, the time period is 5 years, the principal is \$11,592.74, and the interest rate is 3%. C) The principal is \$10,000, the time period is 5 years, the future value is \$11,592.74, and the interest rate is 3%. D) The principal is \$10,000, the time period is 3 years, the future value is \$11,592.74, and the interest rate is 5%. SHOW WORK

2. You can buy a piece of land for \$1,000,000. You think you will be able to sell it to a developer in about five years for twice that amount. Assume the cash flows in the interim years are \$0. You think an investment with this much risk requires an expected return of in the range of 12% to 14% per year. What is the NPV?

A. <\$0

B. =\$0

C. >\$0

D. Insufficient information

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