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Define risk in terms of investment

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GenTech Ltd needs to save $50 million to expand its production lines in six years' time. There are three investment options to consider:

  1. ABC bank: monthly payments due at the end of each month. The interest rate is 3.5% p.a. compounding monthly.
  2. XYZ bank: annual payments due at the end of each year. The interest rate is 3.55% p.a.
  3. CDC bank: payments to be made at the end of year 2, 4 and 6. The interest rate is 3.56% p.a.

Question i. Calculate the payments for each of these options,

Question ii. Indicate which one you prefer. You will need to justify your decision

Question b. Is 'risk' a bad thing? Define risk in terms of investment.

Reference no: EM132499643

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