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
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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: $
Transcribed Image Text: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: $
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