Comparison of
returns.
WG Investors is looking at three different investment opportunities. Investment one is a? five-year investment with a cost of
?$430
and a promised payout of
?$860
at maturity. Investment two is a? seven-year investment with a cost of
?$430
and a promised payout of
?$1,075.
Investment three is a? ten-year investment with a cost of
?$430
and a promised payout of
?$2,021.
WG Investors can take on only one of the three investments. Assuming that all three investment opportunities have the same level of? risk, calculate the effective annual return for each? investment, and select the best investment choice.
What is the effective annual return for investment? one, a? five-year investment with a cost of
?$430
and a promised payout of
$860
at? maturity?
