You are looking at two investment options, A and B. Investment A is a 13-year annuity that needs an end-of-month payment of $1,100, and has an APR of 7.5% compounded monthly. Investment B is also a 13-year investment, but needs a lump sum investment that has as an APR of 7% compounded weekly. How much money do you need to invest in B today as a single lump sum amount if you wish to have the same wealth as in Investment A in 13 years? If Investment B, with 7% APR compounded weekly, gave you the option of investing a constant amount at the end of every six months, then what would this amount be in order to give you the same wealth as Investment A at the end of 13 years?

You are looking at two investment options, A and B. Investment A is a 13-year annuity that needs an end-of-month payment of $1,100, and has an APR of 7.5% compounded monthly. Investment B is also a 13-year investment, but needs a lump sum investment that has as an APR of 7% compounded weekly. How much money do you need to invest in B today as a single lump sum amount if you wish to have the same wealth as in Investment A in 13 years? If Investment B, with 7% APR compounded weekly, gave you the option of investing a constant amount at the end of every six months, then what would this amount be in order to give you the same wealth as Investment A at the end of 13 years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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