Rishi Singh has

$1,600

to invest. His investment counselor suggests that Rishi should buy an investment that pays no interest but will be worth

$2,100

after

7

years.

a. What average annual rate of return will Rishi earn with this investment?

b. Rishi is considering another investment, of equal risk, that earns an annual return of

1.96%

. Which investment should he make, and why?

a. The annual rate of return Rishi will earn with this investment,

r,

is

nothing%.

(Round to two decimal places.)b. Rishi is considering another investment, of equal risk, that earns an annual return of

1.96%

. Which investment should he make, and why?(Select the best answer below.)

A.Rishi should accept the investment that will return

$2,100

because it has a higher return for the same amount of risk.

B.Rishi should accept the investment that will return

$2,100

because it has a lower return for the same amount of risk.

C.Rishi should accept the investment with the return of

1.96%

because it has a higher return for the same amount of risk.

D.Rishi should accept the investment that will return

$2,100

because it has a higher return for less risk.