mira has saved s25.000 over the years and she has the option of investing it in
ID: 2614954 • Letter: M
Question
mira has saved s25.000 over the years and she has the option of investing it in either of the two investment interest compounded monthly, whereas investment b pays 13 percent plans. investment a offers 12 percent t compounded semiannually. what would be the difference between the future values of the two cents if miras investment horizon is seven years? (round your answer to two decimal places.) mira has saved s25.000 over the years and she has the option of investing it in either of the two investment interest compounded monthly, whereas investment b pays 13 percent plans. investment a offers 12 percent t compounded semiannually. what would be the difference between the future values of the two cents if miras investment horizon is seven years? (round your answer to two decimal places.)Explanation / Answer
FV = PV (1+r)n
WHere r is int rate per period & n is no. of period
Alt 1:
FV = 25000 (1+0.0325)28
= 25000 (1.0325)28
= 25000 * 2.4486
= 61215.54
Alt 2:
FV = 25000 (1+0.06)14
= 25000 (1.06)14
= 25000 * 2.2609
= 56522.6
Diff = 61215.54 - 56522.6
= 4692.94
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