Question
Which investment returns a greater future value at time 10; A or B INVESTMENT A time...
Which investment returns a greater future value at time 10; A or B
INVESTMENT A
|
time |
return |
investment |
|
0 |
$1,000.00 |
|
|
1 |
3% |
|
|
2 |
3% |
|
|
3 |
3% |
|
|
4 |
3% |
|
|
5 |
3% |
|
|
6 |
3% |
|
|
7 |
3% |
|
|
8 |
3% |
|
|
9 |
3% |
|
|
10 |
3% |
|
INVESTMENT B
|
time |
return |
investment |
|
0 |
$1,000.00 |
|
|
1 |
1% |
|
|
2 |
3% |
|
|
3 |
4% |
|
|
4 |
3% |
|
|
5 |
-2% |
|
|
6 |
4% |
|
|
7 |
-2% |
|
|
8 |
-1% |
|
|
9 |
-5% |
|
|
10 |
6% |
Homework Answers
Answer #1
Value of investment A after 10 year is calculated in excel and screen shot is provided below:
Value of investment A after 10 year is $1,343.92.
Value of investment B after 10 year is calculated in excel and screen shot is provided below:
Value of investment B after 10 year is $1,109.63.
Since, Value of Investment After 10 year is higher than value of investment B after 10 year. So he should invest in investment A.
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