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Effective annual interest rate calculations

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Reference no: EM132510047

a. Kristi is considering an investment that will pay $7,500 a year for eight years, starting one year from today. How much should she pay for this investment if she wishes to earn a 6% rate of return? Provide complete calculations in your answer

a. Kristi was offered three (3) different assets, as listed below:

· Asset 1 pays annual interest rate of 9% compounding annually.

· Asset 2 pays annual interest rate of 8.9% compounding semi-annually.

· Asset 3 pays interest rate 8.95 compounding monthly.

· Based on effective annual interest rate calculations, which of the above assets is the best choice for Kristi. Show your calculations for all three (3) assets.

Reference no: EM132510047

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