finance ch.9 - you want to always choose the shortest...

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106003714 3. Money has a time value. This is because people have a preference for current consumption since they gain satisfaction from consuming goods and services. In order to convince someone to save or invest the money, people are given some compensation. That compensation usually comes in the form of an investment return or interest earnings. Since a dollar that is saved or invested has to power to increase over time if the earnings are reinvested, a dollar amount invested today becomes a greater dollar amount in the future. 4. Yes 6. It’s always better to compound more frequently. Daily compounding is better than monthly or quarterly. You'll begin earning interest on interest on the second day, not the second month. So
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Unformatted text preview: you want to always choose the shortest compounding period offered to you. 7. An annuity that pays an income or lump sum at a future date. 1. A. $3149.28 B. $2916 C. $2700 D. YES 2. A. $4467.16 B. $9078.83 C. $347,222.22 D. $8333.33 3. A. $4840.97 B. $4400.44 C. $4000 D. YES 5. $45 Today 6. A. $6,079.57 B. $4,728.63 C. $23,159.67 D. $227,273.10 8. $103,399.58 10. $142.81 12. Yes he should sell his future right now for $160,000 $160,000>$155,381.13 14. 10 Million Dollars 15. $7,568.85 16. $2,534.22 22. A. $4,407.99 B. $4,440.73 C. $4,457.84...
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finance ch.9 - you want to always choose the shortest...

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