Which of the following alternatives is more attractive, assuming an interest rat

Question

Which of the following alternatives is more attractive, assuming an interest rate of 12% compounded annually? Alternative A: $500 today. Alternative B: 750 three years from now and Alternive C: $1000 six years from now. How much money will be required in 5 years to repay a $15,000 loan borrow now, if the interest rate is 5% compounded annually? How many years will take to double your investment of $1200 if it has an it interest rate of 8% compounded annually? A long lost ancestor died in 1720 and left the family an inheritance of $1.00, if that money was saved in a bank account that paid 6% annual interest, how much money would that family have this year.

Explanation / Answer

Q 1 .------- 750 from 3 years

Q2 ---- 15000(1+0.05)^5 = 19144022344

Q3 ------- (1+0.08)^n = 2 ------ n = 9 years

Q4. ------ 1x(1+0.06)^293 = 25978766.27

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