Charlie has $ 14,000 to invest for a period of 5 years. The following three alternatives are available to him: • Account 1 pays 2.00% for year 1, 5.00% for year 2, 8.00% for year 3, 11.00% for year 4, and 12.00% for year 5, all with annual compounding. • Account 2 pays 12.00% for year 1, 11.00% for year 2, 8.00% for year 3, 5.00% for year 4, and 2.00% for year 5, all with annual compounding. • Account 3 pays interest at the rate of 7.53524% per year for all 5 years. Based on the available balance at the end of year 5, which alternative is Charlie's best choice? Year 5 Balance, Alternative 1: $ Year 5 Balance, Alternative 2: $ Year 5 Balance, Alternative 3: $
Charlie has $ 14,000 to invest for a period of 5 years. The following three alternatives are available to him: • Account 1 pays 2.00% for year 1, 5.00% for year 2, 8.00% for year 3, 11.00% for year 4, and 12.00% for year 5, all with annual compounding. • Account 2 pays 12.00% for year 1, 11.00% for year 2, 8.00% for year 3, 5.00% for year 4, and 2.00% for year 5, all with annual compounding. • Account 3 pays interest at the rate of 7.53524% per year for all 5 years. Based on the available balance at the end of year 5, which alternative is Charlie's best choice? Year 5 Balance, Alternative 1: $ Year 5 Balance, Alternative 2: $ Year 5 Balance, Alternative 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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