Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

You have $12,000 in cash. You can deposit it today in a mutual fund earning 5.7 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 10.1 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.

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 will you choose?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M938515

Have any Question? 


Related Questions in Basic Finance

1 how does the creation of a secondary market in mortgages

1. How does the creation of a secondary market in mortgages help to promote home ownership? Why might the federal government decide to intervene in the housing market to promote home ownership? 2. Go to the Web site of t ...

You are a new loan officer with alpha mortgage and the

You are a new loan officer with Alpha Mortgage, and the manager of the loan department has just presented a problem to you. He is unable to complete the APR calculation on an adjustable rate mortgage which a borrower app ...

Crypton electronics has a capital structure consisting of

Crypton Electronics has a capital structure consisting of 41% common stock and 59% debt. A debt issue of $100 0par value, 5.8% bonds that mature in 15years and pay annual interest will sell for $975. Common stock of the ...

1 explain how uncertainty concerning future interest rates

1. Explain how uncertainty concerning future interest rates would affect the decision to refund a bond issue. 2. Define the following: direct lease, sale-leaseback arrangement, leveraged lease, and financial (capital) le ...

1 what ratios are used to indicate profitability for banks2

1. What ratios are used to indicate profitability for banks? 2. Why are banks concerned about the percentage of earning assets to total assets? 3. What does the loan loss coverage ratio measure? 4. What type of ratio is ...

How does price efficiency influence the decision to pursue

How does price efficiency influence the decision to pursue an active or passive portfolio strategy? What is the primary problem with the arithmetic average rate of return in evaluating a portfolio's performance? If you w ...

An investor is considering the purchase of either an io or

An investor is considering the purchase of either an IO or PO strip from a CMO offering. The portion of the mortgage pool backing this tranche consists of $1,000,000 in mortgages with a remaining maturity of 10 years and ...

A uk-based multinational company has sold an overseas

A UK-based multinational company has sold an overseas chemical plant, the price for the plant being determined by an earn-out agreement. The amount of the receipt under the agreement is likely to be $10m, with a maximum ...

1 what are the four important issues influencing the

1. What are the four important issues influencing the response process that are listed in this chapter? Describe each. 2. What was the goal of the International Decade for Natural Disaster Reduction? 3. How does the Unit ...

Picture yourself working in the field of international

Picture yourself working in the field of international banking and finance and discuss both what excites you the most and what would present the greatest challenges to you personally.

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen