An investment company has presented you with four investment proposals for the next six years with a fixed 9% annual interest rate: a) invest €5,000 now; b) invest €1200 at the end of each year for the next 5 years; c) invest €3000 now and in addition €500 at the end of each year for the next 5 years; d) invest €2000 at the end of the first, third and fifth years.
An investment company has presented you with four investment proposals for the next six years with a fixed 9% annual interest rate: a) invest €5,000 now; b) invest €1200 at the end of each year for the next 5 years; c) invest €3000 now and in addition €500 at the end of each year for the next 5 years; d) invest €2000 at the end of the first, third and fifth years.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 27P
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Question
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An investment company has presented you with four investment proposals for the next six years with a fixed 9% annual interest rate:
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a) invest €5,000 now;
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b) invest €1200 at the end of each year for the next 5 years;
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c) invest €3000 now and in addition €500 at the end of each year for the next 5 years;
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d) invest €2000 at the end of the first, third and fifth years.
Assuming this is the beginning of your first year, which investment offer allows you to accrue the most?
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