An investment will pay $205 000 in one year's time for an investment of $183 000 today. If the market interest rate is 8% over the same period, should this investment be made?
A)No, because the investment will yield $6 240 less than putting the money in a bank.
B)Yes, because the investment will yield $4 280 more than putting the money in a bank.
C)Yes, because the investment will yield $2 360 more than putting the money in a bank.
D)Yes, because the investment will yield $7 360 more than putting the money in a bank.

Question

Quizplus · Accepted Answer

The future value of $183,000 invested at 8% is $197,640. The investment pays $205,000, which is $7,360 more than the bank investment.

An Investment Will Pay $205 000 in One Year's Time