a)Kristi is considering an investment that will pay $7,500 a year for eight years, starting one year
Question:
a)Kristi is considering an investment that will pay $7,500 a year for eight years, starting one year from today.How much should she pay for this investment if she wishes to earn a 6% rate of return? Provide complete calculations in your answer
Answer:
FV=PV(1+
=7500(1+
=7500
=11953.86
b)Kristi was offered three (3) different assets, as listed below:
Asset 1 pays annual interest rate of 9% compounding annually.
Asset 2 pays annual interest rate of 8.9% compounding semi-annually.
Asset 3 pays interest rate 8.95 compounding monthly.
Based on effective annual interest rate calculations, which of the above assets is the best choice for
Kristi. Show your calculations for all three (3) assets.
a)Kristi is considering an investment that will pay $7,500 a year for eight years, starting one year from today.How much should she pay for this investment if she wishes to earn a 6% rate of return? Provide complete calculations in your answer
Answer:
FV=PV(1+
=7500(1+
=7500
=11953.86
b)Kristi was offered three (3) different assets, as listed below:
Asset 1 pays annual interest rate of 9% compounding annually.
Asset 2 pays annual interest rate of 8.9% compounding semi-annually.
Asset 3 pays interest rate 8.95 compounding monthly.
Based on effective annual interest rate calculations, which of the above assets is the
best choice for
Kristi. Show your calculations for all three (3) assets.
Expert Answer:
