Jasmine Has Two Investment Choices

question 38

Multiple Choice

Jasmine has two investment choices. Alternative 1 requires an immediate outlay of $150 000 and offers a return of $417 000 after seven years. Alternative 2 requires an immediate outlay of $180 000 in return for which $25 000 will be received at the end of every six months for the next seven years. Alternative 3 requires an immediate outlay of $200 000 in return for which $60 000 will be received at the end of every year for the next seven years. The required rate of return on investment is 7.4% compounded semi-annually. What is Jasmine's most preferred option?

• A) Alternative 1
• B) Alternative 2
• C) Alternative 3
• D) Alternative 3 or Alternative 2, as both are essentially same
• E) Alternative 1 or Alternative 2, as both are essentially same

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Definitions:

Public Drunkenness

The act of being intoxicated with alcohol in a public setting, which is considered a legal offense in many jurisdictions.

Disorderly Conduct

A legal charge for a broad range of behaviors deemed disruptive to public peace and decorum, such as fighting, public intoxication, and causing disturbances.

Vagrancy

The state of wandering from place to place without a permanent home or employment, often associated with homelessness.

Personal Problems

Issues or difficulties that are specific to an individual's life circumstances, often impacting their mental or physical well-being.