Jill is considering three investments. All of them have an initial investment of $10,000 and last for 10 years. Investment A - A traditional savings account which pays 6% interest compounded annually. Investment B - This account pays $800 annually at the end of years 1-9 directly to Jill with a final payment at the end of 10 years of $11,200. Investment C - This account pays a gradient starting at the end of year 1 of $400, increasing by $100 each year. At the end of 1C years she also received her $10,000 back. a. Which investment has the greatest Future Worth at the end of 10 years? Jill's MARR is 5%. b. Which investment has the greatest Internal Rate of Return?

Jill is considering three investments. All of them have an initial investment of $10,000 and last for 10 years. Investment A - A traditional savings account which pays 6% interest compounded annually. Investment B - This account pays $800 annually at the end of years 1-9 directly to Jill with a final payment at the end of 10 years of $11,200. Investment C - This account pays a gradient starting at the end of year 1 of $400, increasing by $100 each year. At the end of 1C years she also received her $10,000 back. a. Which investment has the greatest Future Worth at the end of 10 years? Jill's MARR is 5%. b. Which investment has the greatest Internal Rate of Return?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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