## Assignment 1

BUSI 721

Data Driven Finance I

Jones Graduate School of Business

Rice University

Submit a Jupyter notebook. Copy each question into a Markdown cell and provide your answer in the cell or cells below it.

I have $50,000 now and I plan to invest $20,000 in one year and another $20,000 at the end of the following four years (five investments of $20,000 in five years in total). If I earn 6% per year on my investments, what will I have at the end of the five years, including the final investment?

I have $50,000 now and plan to invest money at the end of this year and also for the following four years (five investments in five years in total). I expect to earn 6% per year. I hope to have $200,000 at the end of the five years, including the last investment. How much do I need to invest each year?

What would the monthly payments be on a 5-year loan for $40,000 at 6%?

How much can I borrow on a 5-year loan at 6% if I can afford to pay $500 per month?

An investment earned 10%, 15%, -8%, -3%, and 20% over a five-year span. Inflation over the five years was 3%, 5%, 7%, 4%, and 2%.

- How much did $1 at the beginning of the five years grow to in nominal terms?
- In real terms?

- An investment earned 10%, 15%, -8%, -3%, and 20% over a five-year span.

- What were the corresponding continuously compounded returns?
- What was the sum of the continuously compounded returns?
- How does the natural exponential of the sum of the continuously compounded returns (\(e^{\sum \ldots}\)) compare to the answer to 5a?