Answer to Question #134233 in Finance for Ishmael Rashid

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)

r-interest rate is compounded monthly.

2) a)

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)

4)


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