Business Finance Investments

Questions: 1. A. How many years will it take for an investment of $20,000 now to grow to $40,000, where the rate of interest for the investment is 5% p.a. and compounding occurs every two months?B. Suppose you invest $2000 in a bank account which provides 5% p.a. interest compounded daily. To what value your investment will grow after 5 years. Answers: 1. a) It will require 13.92 years to grow the investment to $40000. The calculations are shown below: Calculation for Periods:- Particulars Amount Present Value of Investment A $20,000 Future Value of Investment B $40,000 Interest Rate per two months C = 5%*(2/12) 0.83% Number of Periods (in Year) NPER(C,0,A,(-B))x(2/12) 13.92 b) The future value of the investment will be $2,568.01. The calculations are shown below: Calculation of Future Value of Investment:- Particulars Amount Present Value A $2,000 Maturity Period (in Days) B 1825 Interest Rate per day C 0.0137% Future Value of Investment FV(C,B,0,(-A)) $2,568.01 Bibliography:- Bodie, Z., Kane, A., Marcus, A. J. (2014).Investments, 10e. McGraw-Hill Education Smart, S. J., Smart, S. B., Gitman, L. J., Joehnk, M. D. (2013).Fundamentals of investing. Pearson Higher Ed.