The B Company has a policy of requiring a rate of return on investment of 16%. Two investment alternatives are available but the company may choose only one. Alternative 1 offers a return of $50 000 after 4 years, $40 000 after 7 years, and $30 000 after 10 years. Alternative 2 will return the company $750 at the end of each month for 10 years.

How much is the investment from Alternative 1? Round answer to zero decimal placesi.e. $89,578

i got the alternative 1 right48568 but i cant get the alternative 2 right i keep geting44772.61i asked my teacher and she said

Your value of r is incorrect.Payments are monthly and therate of return is compounded yearly.So you have to calculate the EFFECTIVE rate (I skipped this topic since we didn't have time to cover it in class).

2nd 2 - gives you ICONV

• NOM=16
• C/Y=1
• EFF CPT
• C/Y=12
• NOM=CPT=14.934166

So that means 16% compounded annually is 14.9% compounded monthly.Use that number for r (remember to divide by 12) but i still get it wrong.