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You are planning to invest $5000 and the financial manager from the Westpac bank gives you the following investments to consider Investment 1: $1500 paid

You are planning to invest $5000 and the financial manager from the Westpac bank gives you the following investments to consider

  • Investment 1: $1500 paid every year for 5 years, with the first payment to be received at the end of year 2
  • Investment 2: $600 paid semiannually for 5 years
  • Investment 3: $100 paid at the end of first quarter and it will grow 1% quarterly forever
  1. What is the annual percentage rate of return of each investment?
  2. Calculate the effective annual rate of return of each investment.
  3. Which investment should you choose? Show all steps, no excel methods

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