Question
As a first-year student, who studied Financing Enterprises, you decide to invest some of your savings. Jennifer, a fellow student is currently running an established
As a first-year student, who studied Financing Enterprises, you decide to invest some of your savings. Jennifer, a fellow student is currently running an established and successful cafe, and has asked you to become a silent partner in her business. She has asked you to invest a lump sum amount of $10,000 today. Under the agreements of the contract, Jennifer has guaranteed that you will receive $15,000 in 3 years' time. Currently, the interest rate on a similar investment is 8 per cent, compounded monthly.
Using your knowledge about time value of money, would you accept (or reject) Jennifer's offer and become a silent partner in her business or should you invest your money elsewhere?Explain and show calculations. Use the formula provided.
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