If you require a 9 percent return on your investments,which would you prefer?
A.) $5,000 today
B.) $15,000 five years from now
C.) $1,000 per year for 15 years
Answers: Take the $15,000 five years from now. Assuming a 9% rate of return, we can multiply the net worth of the money in 14 years, which is when you receive the final contribution from the yearly $1,000 (assuming that this is year zero). The $5,000 compounds 14 times, and gives us the equation 5000(1.09^14)= $16,708.64. If you pinch the $15,000, then the interest compounds nine times, and gives the equation 15000(1.09^9)= $32,578.40. Finally, the $1,000 a year give us the series 1000+1.09u(n-1), assuming u(0)=1000. In this case, u(14)= $29,360.92. Simply put, the $15,000 in five years results contained by the largest sum of money in fourteen years, and is therefore the best investment choice.
What your investment amount? It cant be answered minus knowing the principal.
I would take B, but that has nil to do with your investment. But of the 3 B is the best answer. Thats a no brainer.
5000 now
i cant loaf 5 years for money i might die before getting. and seriously what can 1000 buy you? id prefer lump sum
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B.) $15,000 five years from now
C.) $1,000 per year for 15 years
Answers: Take the $15,000 five years from now. Assuming a 9% rate of return, we can multiply the net worth of the money in 14 years, which is when you receive the final contribution from the yearly $1,000 (assuming that this is year zero). The $5,000 compounds 14 times, and gives us the equation 5000(1.09^14)= $16,708.64. If you pinch the $15,000, then the interest compounds nine times, and gives the equation 15000(1.09^9)= $32,578.40. Finally, the $1,000 a year give us the series 1000+1.09u(n-1), assuming u(0)=1000. In this case, u(14)= $29,360.92. Simply put, the $15,000 in five years results contained by the largest sum of money in fourteen years, and is therefore the best investment choice.
What your investment amount? It cant be answered minus knowing the principal.
I would take B, but that has nil to do with your investment. But of the 3 B is the best answer. Thats a no brainer.
5000 now
i cant loaf 5 years for money i might die before getting. and seriously what can 1000 buy you? id prefer lump sum