Ben Ramsay works for an investment company and is currently negotiating with three potential investors. The company offers two types of investment instrument available for new investors. Instrument alpha pays 10% annually. Instrument beta, on the other hand, pays 20% annually. Investors are allowed to divide their investments between these instruments such that a desired range of total return - between 10% to 20% is achieved. Suppose that the total investment of investor 1, investor 2, and investor 3,is PhP 20,000, PhP 50,000, and PhP 10,000, respectively. How much should each investor put money into each instrument? Investor 1: Instrument alpha = Php Instrument beta = PhP Investor 2: Instrument alpha = Php 25,000 Instrument beta = PhP 25,000 Investor 3: Instrument alpha = Php Instrument beta = Php
Ben Ramsay works for an investment company and is currently negotiating with three potential investors. The company offers two types of investment instrument available for new investors. Instrument alpha pays 10% annually. Instrument beta, on the other hand, pays 20% annually. Investors are allowed to divide their investments between these instruments such that a desired range of total return - between 10% to 20% is achieved. Suppose that the total investment of investor 1, investor 2, and investor 3,is PhP 20,000, PhP 50,000, and PhP 10,000, respectively. How much should each investor put money into each instrument? Investor 1: Instrument alpha = Php Instrument beta = PhP Investor 2: Instrument alpha = Php 25,000 Instrument beta = PhP 25,000 Investor 3: Instrument alpha = Php Instrument beta = Php
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 22P
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