Question

You have your choice of two investment accounts. Investment A is a 6-year annuity that features end-of-month $2,380 payments and has an interest rate of 10 percent compounded monthly. Investment B is an annually compounded lump-sum investment with an interest rate of 12 percent, also good for 6 years. How much money would you need to invest in B today for it to be worth as much as Investment A 6 years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

value of investment A in 6 years

=2380*(((1+(10%/12))^(6*12)-1)/(10%/12))

=233504.93

How much money would you need to invest in B today for it to be worth as much as Investment A 6 years from now

=value of investment A in 6 years/(1+r)^t

=233504.93/(1+12%)^6

=118300.86

the above is answer..