Dimitri is willing to invest $45,000 for eight years, and is an economically rational investor. He has identified three investment alternatives (A, B, and C) that vary in their method of calculating interest and in the annual interest rate offered. Since he can only make one investment during the eight year investment period, complete the following table and indicate whether Dimitri should invest in each of the investments. Note: When calculating each investment's future value, assume that all interest is earned annually. The final value should be rounded to the nearest whole dollar. Investment Interest Rate and Method Expected Future Value Make this investment? A B 10% simple interest 6% compound interest $ C 7% compound interest
Dimitri is willing to invest $45,000 for eight years, and is an economically rational investor. He has identified three investment alternatives (A, B, and C) that vary in their method of calculating interest and in the annual interest rate offered. Since he can only make one investment during the eight year investment period, complete the following table and indicate whether Dimitri should invest in each of the investments. Note: When calculating each investment's future value, assume that all interest is earned annually. The final value should be rounded to the nearest whole dollar. Investment Interest Rate and Method Expected Future Value Make this investment? A B 10% simple interest 6% compound interest $ C 7% compound interest
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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Transcribed Image Text:Dimitri is willing to invest $45,000 for eight years, and is an economically rational investor. He has identified three investment alternatives (A, B, and
C) that vary in their method of calculating interest and in the annual interest rate offered. Since he can only make one investment during the eight
year investment period, complete the following table and indicate whether Dimitri should invest in each of the investments.
Note: When calculating each investment's future value, assume that all interest is earned annually. The final value should be rounded to the nearest
whole dollar.
Investment
Interest Rate and Method
Expected Future Value Make this investment?
A
B
10% simple interest
6% compound interest
$
C
7% compound interest
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