Question

Alysha has to choose between two investments that have the same cost today. Both investments will ultimately pay $1,100 but at different times, as shown in the table below. If Alysha does not choose one of these investments, she could leave the funds in a bank account paying 5 percent per year. Which investment should Alysha choose? (Round answer to 2 decimal places, e.g. 125.12. Do not round your intermediate calculations.) Year Investment A Investment B 1 $0 $200 2 $300 $500 3 $800 $400 Present value of Investment A $

          Alysha has to choose between two investments that have the same cost today. Both investments will ultimately pay $1,100 but at different times, as shown in the table below. If Alysha does not choose one of these investments, she could leave the funds in a bank account paying 5 percent per year.
Which investment should Alysha choose? (Round answer to 2 decimal places, e.g. 125.12. Do not round your intermediate calculations.)
Year
Investment A Investment B
1
$0
$200
2
$300
$500
3
$800
$400
Present value of Investment A
$
        
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Alysha has to choose between two investments that have the same cost today. Both investments will ultimately pay 1,100 but at different times, as shown in the table below. If Alysha does not choose one of these investments, she could leave the funds in a bank account paying 5 percent per year.
Which investment should Alysha choose? (Round answer to 2 decimal places, e.g. 125.12. Do not round your intermediate calculations.)
Year
Investment A Investment B
10
200
2300
500
3800
400
Present value of Investment A

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Horngren’s Cost Accounting
Horngren’s Cost Accounting
Srikant M. Datar, Madhav V. Rajan 16th Edition
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$1,000.00 Present value of InvestmentB
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Transcript

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00:01 We have three accounts that we're going to talk about, and i'm calling them x, y, and z.
00:05 It says the sum of 31 ,000 was invested in these three funds.
00:09 So that means we have x plus y plus z is going to equal to that 31 ,000.
00:16 And it says the first fund grew by 4%.
00:21 So that means we're going to have that.
00:23 If it grew by 4%, that means it earned interest at a rate of 4%.
00:30 So we're 0 .04x.
00:33 The y did it at 5%.
00:36 So we're going to say 0 .05y.
00:39 And then the z one, the last one did it, at a rate of 7 .5%.
00:45 So the 0 .075z.
00:48 So the amount that they made, we're going to add this all up together.
00:56 And it's going to give us a total of 1854.
01:01 Now we have some other relationships.
01:03 It says the amount invested in the third fund.
01:05 Which is going to be z was as equals $1 ,000 less than, that means we're going to subtract $1 ,000.
01:15 The combined amount invested in the other two funds.
01:20 So that means we're going to combine the x plus the y.
01:23 Therefore, we have a third equation.
01:27 And i'm going to rewrite that equation as negative x, negative y, positive z, equals negative 1 ,000.
01:34 So i'm going to go ahead and erase this so i can leave those three together and we can solve for x, y, and z.
01:41 I'm going to go ahead and use equation one and two and add those together because that's going to tell me that 2 z equals to 30 ,000, which means z is going to equal to 15 ,000.
01:53 So we already know that.
01:54 15 ,000 will go here.
01:56 So now the question is how much is going to be in the other two accounts.
02:01 Well, we've got to incorporate this here somehow.
02:03 So i'm going to put z...
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