hw_8_prob_4

hw_8_prob_4 - MARR=9% Net Cash Flow n Option 1 Option 2...

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#4: Option 1 buy a certificate of deposit from a bank at an interest rate of 10% annually for five years Option 2 purchase a bond for $10,000 and invest the bond’s interest in the bank at an interest rate of 9%. The bond pays 10% interest annually and will mature to its face value of $10,000 in five years
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Unformatted text preview: MARR=9% Net Cash Flow n Option 1 Option 2 Option 1-Option 2 $(10,000.00) $(10,000.00) $- 1 $- $1,000.00 $(1,000.00) 2 $- $1,000.00 $(1,000.00) 3 $- $1,000.00 $(1,000.00) 4 $- $1,000.00 $(1,000.00) 5 $16,105.00 $11,000.00 $5,105.00 Since 10% > 9%, Option 1 is the better choice....
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This note was uploaded on 08/31/2009 for the course PHYS 1234 taught by Professor Judge during the Fall '09 term at USC.

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