Exercise 9: You find a stable investment, that allows you to choose to one of the following plans: • 10%, compounded annually; • 9.7%, compounded quarterly; • 9.6%, compounded monthly; or 9.5%, compounded continuously. (a) Under the first plan, how long does it take for your investment to double? (b) Which plan gets the best return on your investment? Which plan gets the worst? (c) How long would it take for the return on the best plan to be double the return of the worst plan?
Exercise 9: You find a stable investment, that allows you to choose to one of the following plans: • 10%, compounded annually; • 9.7%, compounded quarterly; • 9.6%, compounded monthly; or 9.5%, compounded continuously. (a) Under the first plan, how long does it take for your investment to double? (b) Which plan gets the best return on your investment? Which plan gets the worst? (c) How long would it take for the return on the best plan to be double the return of the worst plan?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Exercise 9: You find a stable investment, that allows you to choose to one of the following plans:
• 10%, compounded annually;
• 9.7%, compounded quarterly;
• 9.6%, compounded monthly; or
9.5%, compounded continuously.
(a) Under the first plan, how long does it take for your investment to double?
(b) Which plan gets the best return on your investment? Which plan gets the worst?
(c) How long would it take for the return on the best plan to be double the return of the worst plan?
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