You have $2,500 to invest now and you estimate the average inflation rate to be 5% per year in the next 5 years. Ignoring income taxes, analyze the following situations and indicate which one is more profitable and why.

1. Investing the money for 5 years in a certificate of deposit that earns an interest rate of 8% per year.
2. Buying an antique piece of furniture that you expect to sell for $4,000 in 5 years from now.

Answer rating: 100% (QA)

To determine which investment option is more profitable we need to calculate the future value of the ... View the full answer