1. Which of the following investments would have the highest future value at the

Question

1.     Which of the following investments would have the highest future value at the end of ten years?  Assume that the effective annual rate for all investments is the same and is greater than zero.

a.    Investment A pays $250 at the beginning of every year for the next ten years (a total of 10 payments).

b.    Investment B pays $125 at the end of every 6 month period for the next ten years (a total of 20 payments).

c.     Investment C pays $125 at the beginning of every 6 month period for the next ten years (at total of 20 payments).

d.    Investment D pays $2500 at the end of 10 years (just one payment).

e.    Investment E pays $250 at the end of every year for the next ten years (a total of 10 payments).

Explanation / Answer

a. Investment A pays $250 at the beginning of every year for the next ten years (a total of 10 payments)

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