Assume that you just had your first child and that a relative has offered to open...

Assume that you just had your first child and that a relative has offered to open an investment account on the child’s behalf. The account promises to pay 16% interest and the relative will invest $900 between now an the child’s 18th birthday. The relative offers you two options for contributions. In option A, the relative will contribute $100 every other year on the child’s birthday beginning in year 1. In option B, the relative will contribute $260 today then $160 on the child’s 15th-18th birthdays. Which option would you choose? Calculate your answer using annual cost analysis. USING EXCEL and please show steps.

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Expert Solution

ANSWER IN THE IMAGE ((YELLOW HIGHLIGHTED). FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

jeff jeffy answered 1 year ago

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