The private entrepreneur owns $ 3,000. He is having two options: put money in the bank at 8% per year for 2 years, or keep them at home (the discount rate is 10%) because these funds are temporarily not used in business (the business produces a 10% return on investment). Task: determine the amount accumulated at the end of the period in first case, make calculations using the methods of simple and complex interest Determine the current value of $ 3000 in 2 years at a discount rate of 10% Justify the advantages and disadvantages of each solution.
The private entrepreneur owns $ 3,000. He is having two options: put money in the bank at 8% per year for 2 years, or keep them at home (the discount rate is 10%) because these funds are temporarily not used in business (the business produces a 10% return on investment). Task: determine the amount accumulated at the end of the period in first case, make calculations using the methods of simple and complex interest Determine the current value of $ 3000 in 2 years at a discount rate of 10% Justify the advantages and disadvantages of each solution.
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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The private entrepreneur owns $ 3,000. He is having two options: put money in the bank at 8% per year for 2 years, or keep them at home (the discount rate is 10%) because these funds are temporarily not used in business (the business produces a 10%
Task:
-
determine the amount accumulated at the end of the period in first case, make calculations using the methods of simple and complex interest
-
Determine the current value of $ 3000 in 2 years at a discount rate of 10%
-
Justify the advantages and disadvantages of each solution.
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