Determine which of the following three investments offers you the highest rate of return on your $1,000

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Determine which of the following three investments offers you the highest rate of return on your $1,000 investment over the next five years.

Investment 1: $2,000 lump sum to be received in five years

Investment 2: $300 at the end of each of the next five years

Investment 3: $250 at the beginning of each of the next five years

a. Which investment offers the highest return?

b. Which offers the highest return if the payouts are doubled (i.e., $4,000, $600, and $500)?

c. What causes the big change in the returns on the annuities?

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Introduction to Corporate Finance

ISBN: 978-0324657937

2nd edition

Authors: Scott B. Smart, William L Megginson

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Question Posted: May 13, 2015 05:49 AM

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Determine which of the following three investments offers you the highest rate of return on your $1,000

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Introduction to Corporate Finance

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