Problem 5.33 (Excel Video)

You have $12,000 in cash. You can deposit it today in a mutual fund earning 9.2 percent semiannually, or you can wait, enjoy some of it, and invest $11,000 in your brothers business in two years. Your brother is promising you a return of at least 11.6 percent on your investment. Whichever alternative you choose, you will need to cash in at the end of 10 years. Assume your brother is trustworthy and both investments carry the same risk. (If you solve this problem with algebra round intermediate calculations to 5 decimal places, in all cases, round your input answers to the nearest penny.) Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values youve been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) What would be the future value of the mutual fund investment?

Future value of investment

$

What would be the future value of investing in your brother's business?

Future value of investment

$

Which one would yield the largest amount in 10 years?

Your brother's businessThe mutual fund