urrent Attempt in Progress Charlie has $8,000 to invest for a period of 5 years. The following three alternatives are available to him: Account 1 pays 5.00% for year 1, 7.00% for year 2, 10.00% for year 3, 12.00% for year 4, and 14.00% for year 5, all with annual compounding. Account 2 pays 14.00% for year 1, 12.00% for year 2, 10.00% for year 3, 7.00% for year 4, and 5.00% for year 5, all with annual compounding. Account 3 pays interest at the rate of 9.55135% per year for all 5 years. Based on the available balance at the end of year 5, which alternative is Charlie's best choice? Year 5 Balance, Alternative 1: $ Year 5 Balance, Alternative 2: $ Year 5 Balance, Alternative 3: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±5.
urrent Attempt in Progress Charlie has $8,000 to invest for a period of 5 years. The following three alternatives are available to him: Account 1 pays 5.00% for year 1, 7.00% for year 2, 10.00% for year 3, 12.00% for year 4, and 14.00% for year 5, all with annual compounding. Account 2 pays 14.00% for year 1, 12.00% for year 2, 10.00% for year 3, 7.00% for year 4, and 5.00% for year 5, all with annual compounding. Account 3 pays interest at the rate of 9.55135% per year for all 5 years. Based on the available balance at the end of year 5, which alternative is Charlie's best choice? Year 5 Balance, Alternative 1: $ Year 5 Balance, Alternative 2: $ Year 5 Balance, Alternative 3: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±5.
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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Question
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![**Current Attempt in Progress**
Charlie has $8,000 to invest for a period of 5 years. The following three alternatives are available to him:
- **Account 1** pays 5.00% for year 1, 7.00% for year 2, 10.00% for year 3, 12.00% for year 4, and 14.00% for year 5, all with annual compounding.
- **Account 2** pays 14.00% for year 1, 12.00% for year 2, 10.00% for year 3, 7.00% for year 4, and 5.00% for year 5, all with annual compounding.
- **Account 3** pays interest at the rate of 9.55135% per year for all 5 years.
Based on the available balance at the end of year 5, which alternative is Charlie’s best choice?
[Dropdown menu for selection]
- Year 5 Balance, Alternative 1: $ [Input field]
- Year 5 Balance, Alternative 2: $ [Input field]
- Year 5 Balance, Alternative 3: $ [Input field]
*Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±5.*
Click [here](#) to access the TVM Factor Table Calculator.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F28d9b483-de07-43e8-9711-dcf00568269c%2F4dd1b51f-e770-4fa7-8a52-61e98ab50609%2Fet3sk9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Current Attempt in Progress**
Charlie has $8,000 to invest for a period of 5 years. The following three alternatives are available to him:
- **Account 1** pays 5.00% for year 1, 7.00% for year 2, 10.00% for year 3, 12.00% for year 4, and 14.00% for year 5, all with annual compounding.
- **Account 2** pays 14.00% for year 1, 12.00% for year 2, 10.00% for year 3, 7.00% for year 4, and 5.00% for year 5, all with annual compounding.
- **Account 3** pays interest at the rate of 9.55135% per year for all 5 years.
Based on the available balance at the end of year 5, which alternative is Charlie’s best choice?
[Dropdown menu for selection]
- Year 5 Balance, Alternative 1: $ [Input field]
- Year 5 Balance, Alternative 2: $ [Input field]
- Year 5 Balance, Alternative 3: $ [Input field]
*Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±5.*
Click [here](#) to access the TVM Factor Table Calculator.
Expert Solution
Step 1
Data given:
Investment amount = $8000
n=5 years
Formula to be used:
Future value=Principal * (1+rate)^n
For different rates
Future value=Principal *(1+rate1)*(1+rate2)..
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