expected future value & whether or not to make 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
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expected future value & whether or not to make investment

All other factors being equal, both the simple interest and the compound interest methods will accrue the same amount of
earned interest by the end of the first year.
Yuri is willing to invest $30,000 for six years, and is an economically rational investor. He has identified three investment alternatives (X, Y, and Z)
that vary in their method of calculating interest and in the annual interest rate offered. Since he can only make one investment during the six-year
investment period, complete the following table and indicate whether Yuri 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?
11% compound interest
13% compound interest
13% simple interest
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3.141593
SEP
3.
10
Jr
ETA
Notes
BACK OFFICE REQ
12-16 +/-Weeks
Invoice or
Product
Cancellation,
Refund
Ordering
Questions or
ETA tracking
request
Send to
12-16 +/- Weeks
Check
Refund
delivery and
transfer list
Delivery
Cancellation
Requests
ONLY SELL IF IN STOCK
requests
Request
Requests
Natalie
Natalie
Natalie
Stonla
%24
Transcribed Image Text:All other factors being equal, both the simple interest and the compound interest methods will accrue the same amount of earned interest by the end of the first year. Yuri is willing to invest $30,000 for six years, and is an economically rational investor. He has identified three investment alternatives (X, Y, and Z) that vary in their method of calculating interest and in the annual interest rate offered. Since he can only make one investment during the six-year investment period, complete the following table and indicate whether Yuri 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? 11% compound interest 13% compound interest 13% simple interest Grade It Now Save & Continue Continue without saving 3.141593 SEP 3. 10 Jr ETA Notes BACK OFFICE REQ 12-16 +/-Weeks Invoice or Product Cancellation, Refund Ordering Questions or ETA tracking request Send to 12-16 +/- Weeks Check Refund delivery and transfer list Delivery Cancellation Requests ONLY SELL IF IN STOCK requests Request Requests Natalie Natalie Natalie Stonla %24
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