Ms Khaleesi Cardashian wishes to accumulate $250,000 in five years' time. She has been given the...

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Ms Khaleesi Cardashian wishes to accumulate $250,000 in five years' time. She has been given the choice of five investment alternatives. These are listed below: Investment alternative One: pays 4.8% p.a. simple interest Investment alternative Two: pays 4.6% p.a. compounded annually Investment alternative Three: pays 4.5% p.a. compounded quarterly Investment alternative Four: pays 4.4% p.a. compounded monthly Investment alternative Five: pays 4.3% continuously compounded Which of the above investment alternatives would require the lowest principal payment to reach the goal? Ms Khaleesi Cardashian wishes to accumulate $250,000 in five years' time. She has been given the choice of five investment alternatives. These are listed below: Investment alternative One: pays 4.8% p.a. simple interest Investment alternative Two: pays 4.6% p.a. compounded annually Investment alternative Three: pays 4.5% p.a. compounded quarterly Investment alternative Four: pays 4.4% p.a. compounded monthly Investment alternative Five: pays 4.3% continuously compounded Which of the above investment alternatives would require the lowest principal payment to reach the goal?

Answer rating: 100% (QA)

To determine which investment alternative requires the lowest principal paymentwe need to calculate the required present value for each option thatwhe... View the full answer