Question
5. Zoom is thinking about two different investments options each for 4 years and interest rate is 5% annually: Option A: Receive four end of
5. Zoom is thinking about two different investments options each for 4 years and interest rate is 5% annually: Option A: Receive four end of year payments each of $3,000. Option B: Receive four payments of $2,000, $3,000, $5,000 and $2,000 for the first, second, third and fourth year respectively. Which option has the higher present value?*
a) Option A
b) Option B
c) Both options have the same present value
d) All of the above
e) None of the above
6. Your grandfather just died and left you $100,000 in a trust fund that pays 9.5% interest. You must spend the money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately. How much could you withdraw today and at the beginning of each of the next 3 years and end up with zero in the account?*
a) $24,736
b) $26,038
c) $27,409
d) $28,779
e) None of the above
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started