Kristi is considering an investment that will pay $7,500 a year for eight years, starting one...

Kristi is considering an investment that will pay $7,500 a year for eight years, starting one year from today. How much should she pay for this investment if she wishes to earn a 6% rate of return? Provide complete calculations in your answer

Kristi was offered three (3) different assets, as listed below:

 Asset 1 pays annual interest rate of 9% compounding annually.
 Asset 2 pays annual interest rate of 8.9% compounding semi-annually.
 Asset 3 pays interest rate 8.95 compounding monthly.

Based on effective annual interest rate calculations, which of the above assets is the best choice for Kristi. Show your calculations for all three (3) assets.

Expert Solution

jeff jeffy answered 2 years ago

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