Investment A will return to you $2,089 in one year if you invest $1,750 today. Investment...

Investment A will return to you $2,089 in one year if you invest $1,750 today. Investment B will return to you $3,168 in one year. What is the most you will pay for Investment B? Round to the dollar.

Expert Solution

Rate of return = ($2089-1750)/1750
=$19.3714%
You will pay for $3168
PV= FV/(1+r)^n

Where,
FV= Future Value
PV = Present Value
r = Interest rate
n= periods in number

= $3168/( 1+0.193714)^1

=3168/1.19371

= $2653.9

jeff jeffy answered 2 years ago

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