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
David wants to invest $1,500,000 so that he will have an accumulated amount of at least $2,500,000 after some years. He has two choices of investment A and investment B. Investment A offers him an semi-annual simple interest rate of 10% while investment B offers him an effective annual interest rate of 8% convertible annually. Which investment will help him reach his goal faster? Approximate the time that each investment will reach his goal.
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