Question

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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  • CreatedMarch 26, 2015
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