Account earning an interest rate

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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

Reference no: EM132049826

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