Investment Options Project- Fall21

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Texas A&M University, Kingsville *

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201

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Finance

Date

Apr 3, 2024

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docx

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Uploaded by JudgeAntelopePerson1014

Investment Options Project You will be working with your group on the project outlined below. You can download this project sheet and then upload it into a shared Google document within your group Canvas page. Once completed, you can upload the completed document into Canvas before the due date. Due date is 9/17/21. Group name (have fun with this): Group members: The scenario: You have been hired by a long-lost-newly-discovered aunt to invest $10,000. Your aunt has agreed to give you 20% of whatever money you make for her. However, there is a hitch!!! You are competing against all your new cousins! You and your cousins must research and present your invest plan to your aunt. Whichever plan makes your aunt the most money wins the chance to invest, and the 20%! Below you are presented with 3 different investment options. Your goal is to invest the money in the best way possible so that after 5 years you have made the most money and will get the largest payment for your work. Keep in mind, that this will look different for each group and that you do not have to put all the money into one investment, you may mix and match as needed to optimize your aunt’s return and your potential payday! Read each question carefully!!!!!! The Investment Options: Turtle Investments Turtle investments is known for their steady consistent pay outs. They offer the following investment option for you: Minimum Investment: $500 Each year $22 is added to your account. Your investment is returned to you when you close your account. Unless, you get unlucky!!! Low Risk Factor: Roll a single 20-sided dice (found online here: https://rolladie.net/roll-a-d20- die/ ). If your group rolls a 1 or 2 you are only returned $480 after your initial investment, no matter how much you invest. In other words, if you end up with this scenario you will lose money. Group’s roll___________

Questions 1. Write a function, P (t) for how much money you will have in your account after t years assuming you invest all your money into Turtle Investments and pass the risk factor test. 2. Using the equation from number 1, how much money would you have in your account after 5 years? 3. Write a function, P (t) for how much money you will have in your account after t years assuming you invest the minimum value into Turtle Investments. 4. Given your answer to question 3, when would you have $566 in your investment? 5. Write a function, P (t) for how much money you will have in your account after t years assuming you were unlucky and rolled a 1 or 2.

The Yearly Money Bucket The Yearly Money Bucket is a group of lazy bankers. They only like to work once a year. They offer the following investment option for you. Minimum Investment: $5000 Medium Risk Factor: Roll a 6 sided die (found online here: https://rolladie.net/roll-a-d20-die/ ). You receive the following interest rates based on the outcome of your roll. On a roll of 1: You receive an annually compounded interest rate of 1.45%. On a roll of 2-4: You receive an annually compounded interest rate of 2.30%. On a roll of 5-6: You receive an annually compounded interest rate of 3.15%. Your group’s roll______________ Questions 1. Write a function, B(t), for how much money you will have in your account after t years assuming invest all of your money into The Yearly Money Bucket and roll a 2 on the risk factor test. 2. Given the above, how much money would you have in your account after the 5 year? 3. Write a function, B(t), for how much money you will have in your account after t years assuming you invest the minimum value into The Yearly Money Bucket and roll a 5 on the risk factor test. 4. What is the doubling time of the function in question 3? 5. Write a general function, B(t) ,for how much money you will have in your account after t years assuming you invest B 0 dollars into The Yearly Money Bucket and roll a 3 on the risk factor test.

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Continuously Crazy Investment Group The Continuously Crazy Investment Group live on the edge. They feel no pressure, no pain, and are rumored to feel nothing at all. They work around the clock compounding interest continuously until the wee hours of the night. They offer the following investment plan: Minimum Investment: $1000 High Risk Factor: Roll a 20- sided die (found online here: (found online here: https://rolladie.net/roll-a-d20-die/ ). You receive the following interest rates based on the outcome of your roll. On a roll of 8-17: You receive a continuously compounded interest rate of 2.7%. On a roll of 1-7: You receive an continuously compounded interest rate of 1.2%. On a roll of 18-20: You receive an annually compounded interest rate of 3.5%. Your group’s roll______________ Questions 1. Write a function, C(t), for how much money you will have in your account after t years assuming invest the minimum value into Continuously Crazy Investment Group and roll a 3 on the risk factor test. 2. How much money would you have in your account after the 5 year? 3. What is the annual growth rate on your money given the scenario in question 1. 4. Write a function, C(t), for how much money you will have in your account after t years assuming you invest all of your money into Continuously Crazy Investment Group and roll a 9 on the risk factor test. 5. What is the doubling time of the function from question 4? 6. Write a general function, C(t), for how much money you will have in your account after t years assuming you invest C 0 dollars into Continuously Crazy Investment Group and roll a 18 on the risk factor test.

Project Summary Considering your initial rolls, decide as a group how much money to invest with each of the companies. Write down your plan as if you are presenting it to your aunt and telling her which companies you will invest with and why . Your goal here is to sell your plan to your aunt, who does not know math very well (feel free to use graphs or other graphic as needed)! Give your reasoning for why you chose the amounts you chose for each company. Your work here needs to be detailed and in full sentences.