Which of the Following Investments Would Have the Highest Future

question 61

Multiple Choice

Which of the following investments would have the highest future value at the end of 10 years? Assume that the effective annual rate for all investments is the same and is greater than zero.

• A) Investment A pays $250 at the beginning of every year for the next 10 years (a total of 10 payments).
• B) Investment B pays $125 at the end of every 6-month period for the next 10 years (a total of 20 payments).
• C) Investment C pays $125 at the beginning of every 6-month period for the next 10 years (a total of 20 payments).
• D) Investment D pays $2,500 at the end of 10 years (just one payment).
• E) Investment E pays $250 at the end of every year for the next 10 years (a total of 10 payments).

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Definitions:

Significance Level

The point at which the null hypothesis is considered refuted in statistical analysis, typically represented by the symbol alpha.

Linearly Related

A relationship between two variables where the change in one variable is proportional to the change in another, represented graphically by a straight line.

Residual Plots

Graphical displays of the residuals (errors) from a regression analysis, used to assess the fit of a model.

Profit Per Book

Represents the average amount of money earned as profit from the sale of a single book.