Which option is better assuming they are of equal risk

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1. You deposit $5,000 per year at the end of each of the next 25 years into an account that pays 8% compounded annually. How much could you withdraw at the end of each of the 20 years following your last deposit if all withdrawals are the same dollar amount? (The twenty-fifth and last deposit is made at the beginning of the 20- year period. The first withdrawal is made at the end of the first year in the 20- year period).

A. $43,289

B. $27,832

C. $37,230

D. $18,276

2. You decide to borrow $250,000 to build a new home. The bank charges interest rate of 8% compounded monthly. If you pay back the loan over 30 years, what will your monthly payments be (rounded to the nearest dollar)?

A. $1,687

B. $1,123

C. $1,237

D. $1,834

3. You can buy a $50 savings bond today for $25 and redeem the bond in 10 years for its full face value of $50. You could also put your money market account that pays 7% interest per year. Which option is better, assuming they are of equal risk?

A. The money market account is better because it pays more interest

B. The savings bond is better because it earns a higher interest rate

C. the money market account is better because it requires a smaller investment

D. the money market and savings bond both earn 7% interest, so they are equal in value

Reference no: EM13727498

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