Ask Question
12 January, 12:07

Mira has saved $25,000 over the years and she has the option of investing it in either of the two investment plans. Investment A offers 12 percent interest compounded monthly, whereas Investment B pays 13 percent interest compounded semiannually. The difference between the future values of the two investments if Mira's investment horizon is seven years is closest to: The second is 60,371.86 the first is 57,668.07

(A) $4,204.52

(B) $3,577.87

(C) $1,152.34

(D) $2,703.79

(E) $3,250.22

+3
Answers (1)
  1. 12 January, 14:03
    0
    The correct answer is D.

    Explanation:

    Giving the following information:

    Mira has saved $25,000 over the years and she has the option of investing it in either of the two investment plans. Investment A offers 12 percent interest compounded monthly, whereas Investment B pays 13 percent interest compounded semiannually.

    Investment A:

    PV = 25,000

    n = 7*12 = 84

    i=1% monthly

    FV = PV * (1+i) ^n

    FV = 25,000*1.01^84 = $57,668.07

    Investment B:

    PV = 25,000

    n = 14

    i = 6.5% semianually

    FV = 25,000*1.065^14 = $60,371.86

    The difference is $2,703.79
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Mira has saved $25,000 over the years and she has the option of investing it in either of the two investment plans. Investment A offers 12 ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers