Roger has the opportunity to invest $100,000 in two different assets.The investment in Asset #1 will have a present value of $120,000.The investment in Asset #2 is expected to have a future value of $140,000 in four years.If the market interest rate is 5 percent a year, which one would be the better investment?

Question

Quizplus · Accepted Answer

To compare the investments, calculate the present value of Asset #2 using the formula PV = FV / (1 + r)^n. The present value of Asset #2 is $140,000 / (1.05)^4 = $115,256. Asset #1 has a present value of $120,000, which is greater than the present value of Asset #2.

Roger Has the Opportunity to Invest $100,000 in Two Different