None This question: 1 point(s) possible3Submit qConsider the following two interest options for an investment of $2000: (A) 6% simple interest. (B) 5% interest compounded annually. After how many years will option B outperform option A.The time it will take for option B to outperform option A is years.

For a fixed investment, compound interest will always outperform simple interest over time. This is…

Answered: This question: 1 point(s) possible 3…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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QUESTION 2 (B). An investor must choose between two options. The first option (A) offers AED 10m for AED 2m a yea for 5 years. The second option (B) offers AED 11m of AED 1m a year for four years and AED 7m in year 5. (a). Compare the present value of each option by assuming a range of the required rate of return of t investor, say 8%, 9%, 10%, 11%, and 12%. What is your advice?
You have of $1,000,000 to invest. There are two different investment options for you. First option: (1.21*i)% pays simple interest. Second option: pays i% compounding interest rate. What is the value of i that makes the both options pay the same money at the end of second year. Select one: a. 1.21 b. 42 c. 21 d. 5.5 e. 10
You have $1000 to invest, and you have two options: Option A: 1.725% compounded semiannually Option B: 1.675% compounded continuously. (a) Calculate the annual percentage yield for each option. (Round your answers to three decimal places.) Option A 1.732 % 1.689 Option B % Which is the better option? O Option A Option B (b) Calculate the future value of each investment after 2 years and after 5 years. (Round your answers to two decimal places.) Years Option A Option B 1,034.94 1034.06 2 X X 1,087.35 1087.35 X X
Q) Compare the alternatives shown below on the basis of a future worth analysis, using an interest rate of 8% per year. Choose correct option A.A=-78983.65 B= -25193.45 B.A= 38987.65 B= 39125.45 C.A= 87983.65 B= 52193.45
Consider the following investment options. Option 1: invest $5000 for 7 years at 10% compound annually Option 2: invest $5000 for 7 years compounded continuously at 9% How much will each investment be worth after 7 years? (Round your answers to the nearest cent.) Option 1$ Option 2$ Which investment will earn more money? Option 1Option 2
Determine the present value P you must invest to have the future value A at simple interest rate r after time t. A = $19,000, r = 11.5%, t = 4 years The present value that must be invested to get $19,000 after 4 years at an interest rate of 11.5% is $. (Round up to the nearest cent.)
Q) Compare the alternatives shown below on the basis of a future worth analysis, using an interest rate of 8% per year. Choose option A.A=-78983.65 B= -25193.45 B.A= 38987.65 B= 39125.45 C.A= 87983.65 B= 52193.45
Consider the following two investment alternatives. Determine the range of investment costs for Alternative B (i.e., min. value < X
You have $1000 to invest, and you have two options: Option A: 1.725% compounded semiannually Option B: 1.675% compounded continuously. (a) Calculate the annual percentage yield for each option. (Round your answers to three decimal places.) Option A Option B % Which is the better option? O Option A Option B (b) Calculate the future value of each investment after 2 years and after 5 years. (Round your answers to two decimal places.) Option A Option B Years 1034.94 1034.06 X X 2 1089.67 1087.35 X X Does your choice of option depend on the number of years you leave the money invested? Yes
You are considering an investment that will pay you $1800 per semi-annually for 12 years. If you require a 4.75 percent return on your investment, what is the most you are willing to pay? Question 6 options: $34,366 $29,456 $32,642 $30,684 $28,892
Which option yields a higher return? Option A: $50 in 6 months and $50 in 12 months, assuming a risk-free rate of 3% compounding monthly.Option B: $95 today.
An investor must choose between two options. The first option (A) offers AED 10m for AED 2m a year for 5 years. The second optopm (B) offers AED 11m of AED 1m a year for four yeats and AED 7m in year 5. compare the present value of each option by assumong a range of the required rate of return of the investor say 8% 9% 10% 11% and 12% what is your advice?

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