Managerial Final Exam Essay Example | Topics and Well Written Essays - 250 words

Managerial Final Exam - Essay Example If the interest rate is increased from 5% to 7%, and the interest is paid annually, the amount that will be earned after 5 years will be more than the amount that was earned at the rate of 5%. This is because there are more proceeds from the increased interest rate as compared to when the interest rate is reduced. Therefore the amount realized after 5 years will be $14,025.52 and $19,671.51 after 10 years as explained above. 21. For this bond, at 5% interest, the value will be $813.53. this value will keep increasing as the interest rate decreases, this is because, during the calculations, increase in the interest rate tries to minimize the total value that is achieved at the end of the calculation. Therefore, at 4% interest, the value will increase to 4851.927 and $935.731 at 2% interest rate. 22. One would definitely go for an investment that pays 30% after 5 years than go for one that costs 0.5% per month after 5 years. This is because the it is better foe an interest rate to that matures after a long period of time since the cumulated earnings to be paid will be more than if the interest were small and is only paid