Timothy is retiring from his job soon at which time his employer will make the following offer: A lump sum amount of $200,000 A sum of $15,000 at the beginning of each month for the next 25 years. If the average interest rate is likely to be 5.5% p.a. for the next 25 years, which option should Timothy choose? You are contemplating investing some surplus funds and the following options are available: Invest $50,000 @ 4% p.a. compounded annually for 5 years. Invest $45,000 @ 3% p.a. compounded quarterly for 5 years. Invest $40,000 @4.5% p.a. compounded Semi-annually for 5 years. Invest $50,000 @ 3% p.a. compounded Semi-annually for 5 years. Invest $55,000@ 0.5% p.a compounded weekly for 5 years. Which one of the above is the Second-best option?

Timothy is retiring from his job soon at which time his employer will make the following offer: A lump sum amount of $200,000 A sum of $15,000 at the beginning of each month for the next 25 years. If the average interest rate is likely to be 5.5% p.a. for the next 25 years, which option should Timothy choose? You are contemplating investing some surplus funds and the following options are available: Invest $50,000 @ 4% p.a. compounded annually for 5 years. Invest $45,000 @ 3% p.a. compounded quarterly for 5 years. Invest $40,000 @4.5% p.a. compounded Semi-annually for 5 years. Invest $50,000 @ 3% p.a. compounded Semi-annually for 5 years. Invest $55,000@ 0.5% p.a compounded weekly for 5 years. Which one of the above is the Second-best option?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 23P

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