Working out the interest rate on respective investment offers.....
Im stuck on this tutorial question, I can work out the yield no problem for parts 1 and 2 but am stuck on 3 and 4. Can anyone give a helping hand. Will I have to use interpolation in these parts?
25,000 be invested in an account at the present time. In return for this initial investment,
the investor receives either:
(1) €35,900 in 5 years time, or
(2) €50,300 in 10 years time, or
(3) A series of 5 annual payments of €5,800 each, the first such payment being made today.
(3) A series of 5 annual payments of €8,600 each, the first such payment being made after 5 years.
Rank the alternatives on the basis of their respective yields, with the alternative having the highestyield ranked first and so on.