Reference no: EM131688085
1) You have $12,000 in cash. You can deposit it today in a mutual fund earning 5.8 percent semiannually; or you can wait, enjoy some of it, and invest $11,000 in your brother's business in two years. Your brother is promising you a return of at least 10.9 percent on your investment. Whichever alternative you choose, you will need to cash in at the end of ten years. Assume your brother is trustworthy and both investments carry the same risk. (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your input answers to the nearest penny.)
(a) What would be the future value of the bank investment?
(b) What would be the future value of investing in your brother's business?
(c) Which one would yield the largest amount in 10 years? Your brother's business OR The mutual fund?
2)Samantha plans to invest some money so that she has $3,900 at the end of three years. How much should she invest today given the following choices: (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.)
a. 4.2 percent compounded daily.
b. 4.9 percent compounded monthly.
c. 5.2 percent compounded quarterly.
d. 5.4 percent compounded annually.