Return Compounded Monthly
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You want to invest $5,000 for 3 years. Would you prefer to earn a 6 percent rate of return compounded monthly or a 6 percent rate of return compounded annually? Justify your answer.
All else constant, explain why the present value decreases as the discount rate increases.
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You would want to invest in 6% rate of interest compounded monthly rather than compounded annually --- compounding monthly gives you interest at the monthly level, and then on the next cycle ...
Education
- BE, Bangalore University, India
- MS, University of Wisconsin-Madison
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