Purchase Solution

Preference of Investments

Not what you're looking for?

Ask Custom Question

Which would you prefer?
a. An investment paying interest of 12 percent compounded annually.
b. An investment paying interest of 11.7 percent compounded semiannually.
c. An investment paying 11.5 percent compounded continuously.

Work out the value of each of these investments after 1, 5, and 20 years.

Purchase this Solution
Solution Summary

This solution shows step-by-step calculations to determine the value of each of these investments after 1,5, and 20 years. It also states a preference of which investment gives a better profit.

Solution Preview

Let's let "A" represent a, "B" represent b, and "C" represent c in your question. FV is the future value...oh, and ^ means that that figure or equation is raised.

So, ...

Purchase this Solution
Free BrainMass Quizzes
Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

View More Free Quizzes
Related BrainMass Solutions

  • Risk-indifferent, risk-adverse and risk-seeking

    These investments are for the purchase of a new machine tools from Germany, Japan, and US. The firm earns 10% on its investments and they have a risk index of 5%.

  • Capital Costs and Security

    Cost of capital (WACC)= (Cost of Equity x Proportion of equity from capital)+ (Cost of debt x Proportion of debt from capital)+ (Cost of Preference share x Proportion of preference share from capital).

  • Target Capital Structure and Future investments

    538367 Target Capital Structure and Future investments DC computer Ltd has recently changed its target capital structure and expects to maintain it for future investments.

  • WACC

    Cost of capital (WACC)= (Cost of Equity x Proportion of equity from capital)+ (Cost of debt x Proportion of debt from capital)+ (Cost of Preference share x Proportion of preference share from capital).

  • Risk preference/risk analysis and NPV calculations

    209037 Risk preference/risk analysis and NPV calculations Part one 1. Risk preferences Sharon Smith, the financial manager for Barnett Corporation, wishes to evaluate three prospective investments: X, Y, and Z.

  • Venture Capital - Conversion Order

    six investments.

  • Determining required rate of return in capital budgeting

    Cost of capital (WACC)= (Cost of Equity x Proportion of equity from capital)+ (Cost of debt x Proportion of debt from capital)+ (Cost of Preference share x Proportion of preference share from capital).

  • Target: Estimate the cost of equity, WACC, and unlevered cost of equity.

    Cost of capital (WACC)= (Cost of Equity x Proportion of equity from capital)+ (Cost of debt x Proportion of debt from capital)+ (Cost of Preference share x Proportion of preference share from capital).

  • Finance Questions

    Currently, the firm earns 12% on its investments, which have a risk index of 6%. The expected return and expected risk of the investments are as follows: Investment Expected Return Expected Risk Index X 14% 7% Y 12 8 Z 10 9 a.

View More Related Solutions