Determine the highest return investment

Reference no: EM1359626

Determine which of the following three investments offers you the highest rate of return on your $1,000 investment over the next five years.

Investment 1: $2,000 lump sum to be received in five years
Investment 2: $300 at the end of each of the next five years
Investment 3: $250 at the beginning of each of the next five years

a. Which investment offers the highest return?
b. Which offers the highest return if the payouts are doubled (i.e., $4,000, $600, and $500)?
c. What causes the big change in the returns on the annuities?

Reference no: EM1359626

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