Evaluate each of the following three investments, each costing $1,000 today and providing the returns noted below,

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Evaluate each of the following three investments, each costing $1,000 today and providing the returns noted below, over the next five years.

Investment 1: $2,000 lump sum to be received in five years

Investment 2: $300 at the end of each of the next five years

Investment 3: $250 at the beginning of each of the next five years

a. Which investment offers the highest return?

b. Which offers the highest return if the payouts are doubled (i.e., $4,000, $600, and $500)?

c. What causes the big change in the returns on the annuities?

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Introduction to Corporate Finance What Companies Do

ISBN: 978-1111222284

3rd edition

Authors: John Graham, Scott Smart

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Question Posted: Mar 26, 2015 06:20 AM

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Evaluate each of the following three investments, each costing $1,000 today and providing the returns noted below,

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a Return on Investment 1 2000 1000 1 r 5 20 1 r 5 20 15 1 r 11487 1 r r 1487 Return ...View the full answer

Introduction to Corporate Finance What Companies Do

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