A person wants to invest $17,000 for 3 years and is considering two different investments. The first investment, a money market fund, pays a guaranteed 5.1% interest compounded daily. The second investment, a treasury note, pays 5.3% annual interest. Which investment pays the most interest over the 3-year period? Choose the correct answer below. O A. The treasury note is the better investment, since the market fund produces $ note pays $ in interest. O B. The market fund is the better investment, since the market fund produces $ note pays $ in interest. O C. Both the market fund and the treasury note produce the same interest with $ (Round to the nearest cent as needed.) in interest, and the treasury in interest, and the treasury

A person wants to invest $17,000 for 3 years and is considering two different investments. The first investment, a money market fund, pays a guaranteed 5.1% interest compounded daily. The second investment, a treasury note, pays 5.3% annual interest. Which investment pays the most interest over the 3-year period? Choose the correct answer below. O A. The treasury note is the better investment, since the market fund produces $ note pays $ in interest. O B. The market fund is the better investment, since the market fund produces $ note pays $ in interest. O C. Both the market fund and the treasury note produce the same interest with $ (Round to the nearest cent as needed.) in interest, and the treasury in interest, and the treasury

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 13E: Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a...

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Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a net cash inflow one year from now of 810,000. Assume the cost of capital is 10 percent. Required: 1. Break the 810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?