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Your grandfather has offered you a choice of one of the three following alternatives $9500 now $4000 a year for seven years or $51000 at the end of seven years Use Appendix B and Appendix

Your grandfather has offered you a choice of one of the three following alternatives: $9,500 now; $4,000 a year for seven years; or $51,000 at the end of seven years. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.


a-1. Assuming you could earn 11 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
  


  

a-2. Which alternative should you choose?
  

  $51,000 received at end of seven years
  $4,000 received each year for seven years
  $9,500 received now

 

b-1. If you could earn 12 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
  


  

b-2. Which alternative should you choose?
  

  $51,000 received at end of seven years
  $4,000 received each year for seven years
  $9,500 received now
 

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Apr 04 2020 Read more Less More

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