You must decide when to make the long term investment


Specifically you must decide when to make the long term investment of $2000. You earn this money at a constant rate throughout one year. Temporarily money may be stores in a short term account that earns interest at a rate of intst. Money may be borrowed at a rate of intbor. Long term investments accrue interest at a rate of intlt. We assume all interest is deposited or comes out of a separate non-interest bearing petty cash account. You are to simulate this process day by day for 365 days (1 year). Use intst = 2%, intlt = 6%, and intbor = 8%. Keep track of the total net interest earned. Determine the best time to make the long term investment. Now modify the simulation to incorporate the compounding of interest. Eliminate the petty cash account and instead, each day, credit any interest earned by the short term account to the short term account, any interest earned by the long term account to the long term account and any interest owed to the loan to the loan balance. Using this modified model determine the best time to make the long term investment.

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Management Information Sys: You must decide when to make the long term investment
Reference No:- TGS092218

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