Investment analysis

Investment analysis

Analyze and calculate the following scenarios in 525 words, including which one would you choose and why, and which financing option is best for your business:

Investor #1 decided to loan you the $300,000, paying all of the interest (8% per year) and principal in one lump sum at the end of 5 years.

Investor #2 offers you the $300,000, paying interest at the rate of 8% per year for 4 years and then a final payment of interest and principal at the end of the 5th year.

Answer Preview on Investment analysis

For the Investor 1 the interest to be paid is compounded annually because he is to pay all the interest in five years and the principal lump sum at the end of year 5. The interest for every year is calculated using the formula I = PR/100 where I is the interest to be paid for each year, P the principal remaining at that year and R the rate of interest. At every subsequent year, the principal is the original principal less all interest paid so far………………….

APA
546 words