Determine the equivalent annual cash flows

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Reference no: EM132531081

Travis Wenzel has $2,000 to invest. Usually, he would deposit the money in his savings ac-count, which earns 6% interest. compounded monthly. However, he is considering three al-ternative investment opportunities:

Option 1: Purchasing a bond for $2.000. The bond has a face value of $2,000 and pays $100 every six months for three years. The bond matures in three years.

Option 2: Buying and holding a growth stock that grows 11% per year for three years.

Option 3: Making a personal loan of $2,000 to a friend and receiving $150 interest per year for three years.

Determine the equivalent annual cash flows for each option, and select the best option.

Reference no: EM132531081

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