ou are considering investing $2,000 (n=0) at a simple interest rate of 11% annually for five years (N=5) or investing at the initial moment $1,500 (n=0) and $500 two years after (n=2) at 10% compounded monthly for five years total (N=5). Draw the cash flow and beam diagram for the two options. Which option is better at the end of the 5th year?
ou are considering investing $2,000 (n=0) at a simple interest rate of 11% annually for five years (N=5) or investing at the initial moment $1,500 (n=0) and $500 two years after (n=2) at 10% compounded monthly for five years total (N=5). Draw the cash flow and beam diagram for the two options. Which option is better at the end of the 5th year?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You are considering investing $2,000 (n=0) at a simple interest rate of 11% annually for five years (N=5) or investing at the initial moment $1,500 (n=0) and $500 two years after (n=2) at 10% compounded monthly for five years total (N=5).
Draw the cash flow and beam diagram for the two options.
Which option is better at the end of the 5th year?
Please provide all steps for work!!!
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