Scenario: Tom Has Two Investment Options

question 109

Multiple Choice

Scenario: Tom has two investment options. He can either invest $3,000 in a friend's project or he can deposit the same amount in a bank that offers him an annual rate of interest of 6 percent. If he invests in his friend's project, he will receive $3,400 after 5 years.
-Refer to the scenario above.Which of the following statements is true?

• A) The discounted value of $3,400 to be received after 5 years is $3,000.
• B) Tom's return from investing in his friend's project is higher than the amount he would receive from the bank after 5 years.
• C) Tom's return from investing in the bank is higher than the amount he would receive from his friend's project after 5 years.
• D) The returns on both investments are likely to be similar, and Tom should be indifferent about investing in either option.

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Application of corrective measures by increasing degrees

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A legal system characterized by the development of law through judicial decisions and precedents, primarily in contrast to statutory laws.