Explore BrainMass

Explore BrainMass

    Choosing between assets

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A wealthy Uncle has offered to give you either of assets: (a) an asset that pays $500 at the end of three years or (b) an asset that pays $100 at the end of each year for five years. Assume that both assets earn a 7% annual rate of return. Which asset should you choose?

    © BrainMass Inc. brainmass.com June 4, 2020, 12:15 am ad1c9bdddf
    https://brainmass.com/math/basic-algebra/choosing-between-assets-327604

    Solution Preview

    A wealthy Uncle has offered to give you either of assets: (a) an asset that pays $500 at the end of three years or

    (b) an asset that pays $100 at the end of each year for five years. Assume that both assets earn a 7% annual rate of return.  Which asset should you choose?

    The alternative that provides a higher future ...

    Solution Summary

    Choice between two assets using time value of money are provided.

    $2.19

    ADVERTISEMENT