Bonds issued by Raxin Accounting have a total yield of 11.4% annually, while Raxin Accounting stocks have a total yield of 14.4% annually. If you invest $2,600 in Raxin Accounting bonds and $2,000 in Raxin Accounting stocks, which investment will have a greater return after nine years, and how much greater will it be

Question

Mathematics

Harrington

5 May, 13:45

Bonds issued by Raxin Accounting have a total yield of 11.4% annually, while Raxin Accounting stocks have a total yield of 14.4% annually. If you invest $2,600 in Raxin Accounting bonds and $2,000 in Raxin Accounting stocks, which investment will have a greater return after nine years, and how much greater will it be

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Lisa Nash · Answer 1

This can be solved by comparing the future worth of each investment:

F = p (1+i) ^n

Where F is the future worth

P is the current value

i is the interes rate

n is the number of years

for the bond

F = 2600 * (1+0.114) ^9

F = $ 6869.74

For the stocks

F = 2000 * (1+0.144) ^9

F = $ 6712.19

The bond has greater value by $ 157.55