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You have two options to invest. Option A costs $1000 and returns $1500 at the end of the first year, $1000 at the end of
You have two options to invest. Option A costs $1000 and returns $1500 at the end of the first year, $1000 at the end of the second, and $500 at the end of the third. Option B costs $900 and returns $500 at the end of the first year, $1000 at the end of the second, and $1500 at the end of the third. A friend tells you that since interest rates are 3% you should always take the investment that pays back the most early on. Hence, your friend suggests you should invest in option A. Is your friend correct?
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