You have choice when subscribing to our magazine for four years: you can Option A: pay $95 now for a four year subscription, Option B: pay $30 at the end of each year for four years, Option C: pay $50 today and $60 again three years from today. Which is the best deal for you, the subscriber, if the interest is 10% yearly?

You have choice when subscribing to our magazine for four years: you can Option A: pay $95 now for a four year subscription, Option B: pay $30 at the end of each year for four years, Option C: pay $50 today and $60 again three years from today. Which is the best deal for you, the subscriber, if the interest is 10% yearly?

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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Similar questions

You have purchased a guaranteed investment contract (GIC) from an insurance firm that promises to pay you a 5% compound rate of return per year for 6 years. If you pay $20,000 for the GIC today and receive no interest along the way, you will get __________ in 6 years (to the nearest dollar). (Round your answer to the nearest whole dollar).
Suppose you would like to purchase a new mustang GT. The sticker price of the mustang you want is $40000. The dealer is able to give you an APR of 4% for 5 years. How much will your monthly payments be?How much will you have paid in interest once the loan is paid off?
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You are offered the following two choices. You can either receive Option I: 3 annual payments of $100 each to be received exactly 1, 2, and 3 years from now; Or, Option II: one payment of $269 to be received exactly one year from now. The annual interest rate (as an EAR) that would make you indifferent between receiving the above two options is _______%.
Suppose you are offered the alternative of receiving either $3,000 at the end of 8 years or $2,000 today. What interest would make you indifferent to your choice between $2,000 and the promise of $3,000 at the end of eight years?
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Find the monthly payment for the 15- year option.
You are planning to retire in 25 years time. Immediately after your retirement, you wish to go for a round the world trip lasting one year. Your monthly expenses for the trip work out to be £9000 and the first withdrawal will be made at the end of the month after your retirement. You also want to provide yourself with £35,000 a year for next 15 years on your return from the world trip. the monthly saving amount is 136.07 if the effective rate of interest is 14% per annum.Your firm has a retirement plan that matches all employee contributions with employer contributions on a two-to-one basis. That is if an employee contributes £1,000 per year, the company will add £2,000 to make the total contribution £3,000. The firm guarantees a fixed 6 per cent return on the funds. Alternatively, you can provide for retirement yourself, and you think you can earn 9 per cent on your money. The first contribution will be made one year from today. At that time and every year thereafter, you will put…

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