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Please answer the following question QUICK, showing all work accordingly on all sections. Thank you. Consider the following alternatives: i. $130 received in one year
Please answer the following question QUICK, showing all work accordingly on all sections. Thank you.
Consider the following alternatives: i. $130 received in one year ii. $230 received in five years iii. $320 received in 10 years a. Rank the alternatives from most valuable to least valuable if the interest rate is 8% per year. b. What is your ranking if the interest rate is only 3% per year? c. What is your ranking if the interest rate is 17% per year? Which do you prefer: a bank account that pays 4.3% per year (EAR) for three years or a. An account that pays 2.3% every six months for three years? b. An account that pays 7.7% every 18 months for three years? c. An account that pays 0.68% per month for three years? (Note: Compare your current bank EAR with each of the three alternative accounts. Be careful not to round any intermediate steps less than six decimal places.)Step by Step Solution
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