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March 26, 2017

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A client comes to you for investment advice on his $500,000 winnings from the lottery. He has been offered the following options by three different financial institutions and requests assistance to help understand which option would be the best for his investment.

Option 1: 6% compounded interest quarterly for 5 years.
Option 2: 8% compounded interest annually for 5 years.
Option 3: 14.5% simple interest for 10 years.

  • math - ,

    find the amount of 1$ at the end of 10 years for each

    1. value = (1+.06/4)^40 = 1.814
    2. value = (1+.08)^10 = 2.16
    3. value = 1 + 1(.145)10) = 2.45

    draw your conclusion

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