7) After with two investment options. Which investment yields the greater return over 10 years? 7% compounded monthly or 6.85% compounded continuously? How much more is yielded by the you paid back your friend, your uncle offers you $14,000 to invest. You are presented better investment?

7) After with two investment options. Which investment yields the greater return over 10 years? 7% compounded monthly or 6.85% compounded continuously? How much more is yielded by the you paid back your friend, your uncle offers you $14,000 to invest. You are presented better investment?

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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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

7) After you paid back your friend, your uncle offers you $14,000 to invest. You are presented
with two investment options. Which investment yields the greater return over 10 years? 7%
compounded monthly or 6.85% compounded continuously? How much more is yielded by the
better investment?
DEC
A
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