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Lina20 [59]
2 years ago
8

An investment will pay $202,000 at the end of next year for an investment of $182,000 at the start of the year. If the market in

terest rate is 7.9% over the same period, should this investment be made
Business
1 answer:
lapo4ka [179]2 years ago
7 0

Answer:

The first investment is more profitable than the general market interest rate.

Explanation:

Giving the following information:

An investment will pay $202,000 at the end of next year for an investment of $182,000 at the start of the year. The market interest rate is 7.9% over the same period.

<u>To compare both options, we need to calculate the final value of investing the $182,000 in other investment that pays a 7.9% interest rate.</u>

We need to use the following formula:

FV= PV*(1+i)^n

FV= 182,000*(1.079)= $196,378

The first investment is more profitable than the general market interest rate.

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