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Fund B Fund A Year Year 1 $ 500.00 2 $ 800.00 3 $ 400.00 4 $ 400.00 5 $ 1,000.00 1 $ 600.00 2
Fund B Fund A Year Year 1 $ 500.00 2 $ 800.00 3 $ 400.00 4 $ 400.00 5 $ 1,000.00 1 $ 600.00 2 $ 300.00 3 $ 500.00 4 $ 400.00 5 $1,200.00 You go to the bank to select a fund to invest in today. There two available options with cash flow characteristics summarized in the following figure. They both cost you $2200 today to invest. Your required rate of return is 10%. Answer the following questions: What is Fund A worth today? What is Fund B worth today? Which Fund should you choose? Clearly state why. Answer each question in the available box. Include formulas and necessary explanations to receive partial credits
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