You are contemplating investing some surplus funds and the following options are available: 1. Invest $50,000 @ 4% p.a. compounded annually for 5 years. 2. Invest $45,000 @ 3% p.a. compounded quarterly for 5 years. 3. Invest $40,000 4.5% p.a. compounded semi-annually for 5 years. 4. Invest $50,000 @ 3% p.a. compounded semi-annually for 5 years. 5. Invest $55,000 @ 0.5% p.a. compounded weekly for 5 years Which one of the above is the second-best option?

You are contemplating investing some surplus funds and the following options are available: 1. Invest $50,000 @ 4% p.a. compounded annually for 5 years. 2. Invest $45,000 @ 3% p.a. compounded quarterly for 5 years. 3. Invest $40,000 4.5% p.a. compounded semi-annually for 5 years. 4. Invest $50,000 @ 3% p.a. compounded semi-annually for 5 years. 5. Invest $55,000 @ 0.5% p.a. compounded weekly for 5 years Which one of the above is the second-best option?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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There are two investment options available for you. The first option requires you to invest 5,000$ in 1 year with 7% interest rate and collect your return in year 27. Second option requires you to put 500$ today with 11% interest rate and collect the fund in year 65. What is the compounding effect combination of these two investments? Select one: a.470,570 b.410,795 C.490,510 d.465,070
Problem 1: You can choose between two different investments: (A) an annuity that pays $10,000 each year for the next 6 years; (B) a perpetuity that pays $10,000 forever, starting 11 years from now. 1. Which investment do you choose, A or B, if the interest rate is 5%? What if it is 10%? Explain in words the reason behind your choices.
You have invested P100,000 in a mutual fund that promises to pay 8% each year. You will keep this for 10 years and then cash out the total value. The cost to close the mutual fund account by then is expected to be P5,000. If your minimum return from this investment is 7%, compute for your cost of illiquity with regard to the investment.
1. What will be the present value, if $6,800 is discounted back 4 years at an interest rate of 4% compound semi-annually? 2. as the Fund manager for bank of Trinidad and Tobago Limited, you are to advise the following two clients based on their respective financial situations a) your best friend has asked to assist him in making the best investment out of the following options. which would you advise him to choose and why Option 1 $12,000 in 5 year's time at 6% interest Option 2 $15,000 in two year's time at 9% Option 3 $15,000 today. no strings attached Option 4 $5,000 each year for 2 years at 7% percent compounded semi- anually
A sinking fund is generated for the recovery of bond of $1000000 at the end of 25 years. How much money should be given out of profit each year for the sinking fund, if the investment could earn interest of 4% per annum..?
You have the ability to invest $100,000 and have a choice between the following investments that return $150,000 over the next 5 years: Year A B C D 1 $10,000 $30,000 $50,000 2 $20,000 $30,000 $40,000 3 $30,000 $30,000 $30,000 4 $40,000 $30,000 $20,000 5 $50,000 $30,000 $10,000 $150,000 Required: a. Based on cash flows given, with no other analysis, which investments would be a good investment? Which would be a bad investment? b. Based on cash flows given, and no other analysis, rank the investments based on preference/ desirability. Rank 1st, 2nd, 3rd, 4th. If ties, please explain why! c. If you analyzed the cash flows, what would you do? Briefly explain NOTE: Each of the above requires a short narrative answer.
Suppose that you have an opportunity to invest in a fund that pays 12% interest compoundedannually. Today, you invest P10,000 into this fund. Three years later, you borrow P5,000 from alocal bank at 10% effective annual interest and invest it in the fund. Two years later, you withdrawenough money from the fund to repay the bank loan and all interest due on it. Three years laterfrom this withdrawal you start taking P2,000 per year for 5 years out of the fund. After 5 years, youhave withdrawn your original P10,000. The amount remaining in the fund is earned interest. Howmuch remains?
You have $5,000 to invest You are comparing two investment funds. Fund A returns 4%/yr compounded monthly Fund B returns 4.05% compounded quarterly. Which should you choose and why?
You plan to deposit $100 at the end of every quarter (3 months) for 10 years starting at the end of month 1. Then after leaving the money in the account for several years, you plan to withdraw everything 20 years from today. How much is available to withdraw at the end of year 20 if the account pays a nominal annual rate of 6% compounded monthly? Question 4 Part A: Choose the correct Cash Flow Diagram for this scenario from the following choices. Option A Option B F=? F=? 120 1 120 240 240 i = 0.5% i= 6% A = 100 A = 100 Option C Option D F=? F=? 10 10 20 20 i= 0.5% i = 6% A = 100 A = 100 Question 4 Part B: Identify the correct Function Notation for this scenario. F = 100(P/A,0.5%,10)(P/F, 0.5%, 10) O F = 100(F/A,6%,120)(P/F, 6%, 120) O F = 100(F/A,0.5%,120)(F/P, 0.5%, 120) F = 100(F/A,6%,10)(F/P, 6%, 10) Question 4 Part C: Provide the final value for withdrawal at the end of year 20. Enter your answer in the form: 12345.67 Question 4 Part D: Choose the statement that is most correct…
Complete a,b,& c please and thank you
please i need help
A borrower bought a house for $300,000; he can obtain an 80% loan with a 20-year fully amortizing, 7% interest rate and monthly payment. Alternatively, he could get a 30-year fully amortizing 90% loan at 9% What is the incremental cost of borrowing the additional fund?

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