Scenario: a Friend Approaches You with Four Different Investment Plans

Multiple Choice

Scenario: A friend approaches you with four different investment plans that offer you the following returns on an investment of $10,000.
Plan 1: promises a return of $20,000 in 5 years
Plan 2: promises you a return of $5,000 in 2 years and $2,000 in 3 years
Plan 3: promises you a return of $20,000 in 20 years
Plan 4: promises you a return of $15,000 in 10 years
The market rate of interest is 5 percent.
-Refer to the scenario above.Which of the following will you choose in order to maximize returns?

A) Plan 1
B) Plan 2
C) Plan 3
D) Plan 4