he bank she approached with her busin idea gave her 3 investment options to choose from. Option A: To invest the money in a business that pays an interest of 5% compounded quarterly. Option B: To invest in a business that pays an interest of 4% compounded monthly Option C: To invest in a business that pays an interest of 4.5% compounded continuously. Which option should Martha choose?

he bank she approached with her busin idea gave her 3 investment options to choose from. Option A: To invest the money in a business that pays an interest of 5% compounded quarterly. Option B: To invest in a business that pays an interest of 4% compounded monthly Option C: To invest in a business that pays an interest of 4.5% compounded continuously. Which option should Martha choose?

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

Assuming that you run a small business and need P50,000 of financing, you can either take out a P50,000 bank loan at a 10 percent interest rate, or you can sell a 30 percent stake in your business to your neighbor for P50,000. Supposing that your business earns only at P15,000. What will you choose? Equity Financing or Debt Financing? Show the computations for the two financing decisions.
An investor has $100,000 to invest in a business venture, or she can earn 10%/year with a $100,000 certificate of deposit for 4 years. Three possible business ventures have been identified. Any money not invested in the business venture can be put into a bank account that earns 7%/year. Basedon a future worth analysis, what should be done with the $100,000?
There is an investor stating they will pay out $84,000 at the end of 4 years. In order to invest into the opportunity, you'll need to make a deposit of $10,000 to thier indicated bank account. What is the average annaul return rate. Use excel functions to indicate your steps.
Off-The-Books Investment Firm, LLC, has offered you an investment it says will return to you $20,000 in 2 years. To get in, you'll need to make a $10,000 deposit to their receivables account and promise not to tell anyone about it. What is the annual return on investment? Answer in written and excel.
Off-The-Books Investment Firm, LLC, has offered you an investment it says will return to you $20,000 in 2 years. To get in, you'll need to make a $10,000 deposit to their receivables account and promise not to tell anyone about it. What is the annual return on investment? Answer in Excel.
Soo Ling wants to start a business that she believes can produce cash flows of RM5,600, RM48,200, and RM125,000 at the end of each of the next three years, respectively. At the end of three years, she thinks she can sell the business for RM250,000. At a discount rate of 16 percent, what is her business worth today? Select one: A. RM314,011.33 B. RM297,077.17 C. RM325,837.81 D. RM280,894.67
Maria plans to take a scheme loan to expand her trading business. Based on her survey, she ended up with two plans which are Plan A and Plan B. She could get enough cash through Plan A that uses simple interest promissory note which offers RM25,000 for 180 days with a simple interest rate of 10% per annum. On the other side, Plan B also offers RM26,000 with a bank discount loan of 11% for 180 days. i. Compare the value of interest in Plan A with the bank discount amount in Plan B. ii. Calculate the amount received by Maria in each plan. iii. Compute the maturity value for each plan. iv. Identify which plan is better for Maria to take a loan. Justify your answer.
Will Stephanie have enough funds for her investment in stocks and bonds, when needed? What will be the surplus / shortfall, if any? Given that Stephanie’s bank offers an interest rate of 6% per year, what additional amount should she have deposited as a fixed deposit in the bank so as to accumulate the amount needed for her investment in stocks and bonds when needed? 3. Suppose Stephanie deposited the $50,000 in a fixed deposit. For the shortfall, she thought of purchasing a 5-year ordinary annuity that pays an interest rate of 3.5% per annum, what annual deposit will be required to cover the shortfall? 4. Which of the two options would you recommend for covering the shortfall (Choose between the options in questions 8 and 9 above). Support your response with suitable computation.
Elinore is asked to invest $4,900 in a friend's business with the promise that the friend will repay $5,390 in one year's time. Elinore finds her best alternative to this investment, with similar risk, is one that will pay her $5,292 in one year's time. U.S. securities of similar term offer a rate of return of 7%. What is the opportunity cost of capital in this case? O A. 9% О В. 10% С. 8% O D. 7%
Describe the differences between investment, savings, speculation and gambling and identify the categories of the following scenario. Scenario 1 Melissa deposits RM500 every month in her savings account so that she can use the money as a down payment for her new car in two years’ time. Scenario 2 Zack bought 100 lottery tickets at RM5.00 per ticket with the hope of winning the first prize plus a bonus of RM 2 million. Scenario 3 Emily bought 5,000 units of MWM shares at RM0.55 per share and she intends to sell it as soon as the price rises to RM0.62 per share. Scenario 4 David bought 1,000 units of ABC Bank shares at RM3.50 per share and plans to hold them for the long term because he thinks that ABC Bank would be able to pay ‘good’ dividends and the price of the shares would increase in the future.
What is the excel function and formula for this question? Off-The-Books Investment Firm, LLC, has offered you an investment it says will return to you $20,000 in 2 years. To get in, you'll need to make a $10,000 deposit to their receivables account and promise not to tell anyone about it. What is the annual return on this investment?
Yani has $12,000 for investment purposes. His bank has offered the following three choices: Choice 1. Aspecial savings certificate that will pay $180 each month for 5 years and a lump sum payment at the end of 5 years of $13,000 Choice 2. Buy a share of a racehorse for $12,000 that will be worth $24,000 in 5 years Choice 3. Put the money in a savings account that will have an interest rate of 12% per year compounded monthly Use an annual worth analysis to make a recommendation to Yani. Click here to access the TVM Factor Table Calculator What is the annual worth of each choice? Choice 1, Certificate: $ Choice 2, Racehorse: $ Choice 3, Savings Account: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is +4. Which choice should be recommended to Yani?

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