Reza Is Trying to Decide Between to Investment Alternatives

question 47

Multiple Choice

Reza is trying to decide between to investment alternatives.Invest A allows her to invest $100 at the beginning of every month for 15 years at an interest of 9.0% per year.Investment B allows her to invest $1,350 at the end of every year for 15 years at 8.7% interest.Which of the following is true regarding these two alternatives?

• A)Investment A will grow by $1,787 more than Investment B .
• B)Investment B will grow by $1,787 less than Investment A.
• C)Both Investment A and Investment B grow to exactly the same amount.
• D)Investment A will always be better because it always better to invest small amounts monthly rather than one amount at the end of the year.

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Definitions:

Higher Prices

An increase in the cost of goods or services.

Tax

A compulsory monetary fee or different form of levy required from a taxpayer by a governmental body, used to finance government operations and various public costs.

Sellers

Entities or individuals that provide goods or services in exchange for payment, crucial to the operation of any market.

Tax

A compulsory financial charge imposed by a government on individuals, corporations, or goods to finance government activities and public expenditure.