Choice of three retirement-planning investments

Assignment Help Financial Management

Reference no: EM131356128

Dixon Shuttleworth has been offered the choice of three retirement-planning investments. The first investment offers a 5 percent return for the first 5 years, a 10 percent return for the next 5 years, and a 20 percent return thereafter. The second investment offers 10 percent for the first 10 years and 15 percent thereafter. The third investment offers a constant 11 percent rate of return. Determine, for each of the given number of years, which of these investments is the best for Dixon if he plans to make one payment today into one of these funds and plans to retire in 15 years?

A. Choose Option 1 since FV of $1 is 5.1146

B. Choose Option 3 since FV of $1 is 4.7846

C. Choose Option 1 since FV of $1 is 5.2169

D. Choose Option 2 since FV of $1 is 5.2169

E. Choose Option 2 since FV of $1 is 5.1146

Reference no: EM131356128

Questions Cloud

Correlation matrix for google during last calendar year : Correlation matrix for the Google during the last calendar year. (2015 yahoo data). Standard deviation for Google and for the portfolio during the last calendar year. (2015 yahoo data). Sharpe ratio for google and for the portfolio during the last ca..

Liabilities having relative variable returns : Which of the following is typically concerned with their investment assets having relatively fixed returns and their liabilities having relative variable returns? If an investor wants to invest 100% of her portfolio in safe assets but does not want t..

Life insurance companies seek long term investments : When life insurance companies seek long term investments, they are focusing on________.

Mortgage with a teaser rate-effective interest rate : A mortgage broker is offering a 30-year mortgage with a teaser rate. In the first two years of the mortgage, the borrower makes monthly payments on only a 6.2 percent APR interest rate. After the second year, the mortgage interest charged increases t..

Choice of three retirement-planning investments : Dixon Shuttleworth has been offered the choice of three retirement-planning investments. The first investment offers a 5 percent return for the first 5 years, a 10 percent return for the next 5 years, and a 20 percent return thereafter. Determine, fo..

How many shares of stock must the firm sell : Wear Ever is expanding and needs $9 million to help fund this growth. The firm estimates it can sell new shares of stock for $40 a share. It also estimates it will cost an additional $350,000 for filing and legal fees related to the stock issue. The ..

The firm issued rights to raise new equity : A company’s stock currently sells for $59 per share. Last week the firm issued rights to raise new equity. To purchase a new share, a stockholder must remit $14 and 4 rights. What is the ex-rights stock price?

Needed to purchase one new share of stock in this offering : A.K. Stevenson wants to raise $10 million through a rights offering. The subscription price is set at $10. Currently, the company has 2.2 million shares outstanding with a current market price of $11.76 a share. Each shareholder will receive one righ..

Expected rate of return on this investment : You can pay $950 for an investment today that pays $25 every half year for the next 5 years and has a terminal payment of $1,000. What is your expected rate of return on this investment?

User Account

All Pages