Assume a $4,000 investment and the following cash flows for two alternatives.
Year Investment X Investment Y
1 $1,000 $1,300
2 800 2,800
3 700 100
a. Under the payback method, which investment should be chosen? (Show your work/analysis/calculations for each investment).
b. Why do other methods allow for a better analysis?
How much will Pauline pay in interest if she takes out a simple interest loan with a principal of $3,900 at 7.2% for three years?
Calculate the return on investment in dollars and as a percentage for an investment that you purchase for $500 and sell for $600.