Question

Which investment returns a greater future value at time 10; A or B

INVESTMENT A

time	return	investment
0		$1,000.00
1	3%
2	3%
3	3%
4	3%
5	3%
6	3%
7	3%
8	3%
9	3%
10	3%

INVESTMENT B

time	return	investment
0		$1,000.00
1	1%
2	2%
3	3%
4	3%
5	4%
6	3%
7	4%
8	4%
9	1%
10	3%

Answer 1

Investment A
Time	PV	Return	Future value
0.000	1,000.000	1.000	1,000.000
1.000	1,000.000	1.030	1,030.000
2.000	1,030.000	1.030	1,060.900
3.000	1,060.900	1.030	1,092.727
4.000	1,092.727	1.030	1,125.509
5.000	1,125.509	1.030	1,159.274
6.000	1,159.274	1.030	1,194.052
7.000	1,194.052	1.030	1,229.874
8.000	1,229.874	1.030	1,266.770
9.000	1,266.770	1.030	1,304.773
10.000	1,304.773	1.030	1,343.916
shortcut method
	1.03^10*1000
	1,343.916
Investment B
Time	PV	Return	Future value
0.000	1,000.000	1.000	1,000.000
1.000	1,000.000	1.010	1,010.000
2.000	1,010.000	1.020	1,030.200
3.000	1,030.200	1.030	1,061.106
4.000	1,061.106	1.030	1,092.939
5.000	1,092.939	1.040	1,136.657
6.000	1,136.657	1.030	1,170.756
7.000	1,170.756	1.040	1,217.587
8.000	1,217.587	1.040	1,266.290
9.000	1,266.290	1.010	1,278.953
10.000	1,278.953	1.030	1,317.322
shortcut method
	1000*(1.03^4)*(1.01^2)*(1.04^3)*1.02
	1,317.322
Investment A has higher future value