2. Which would you prefer to receive, if you can invest the funds at a 5%...

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2. Which would you prefer to receive, if you can invest the funds at a 5% annual return? Find the present value for each option. a) $1,000 a year for 10 years, or b) $800 a year for 15 years at 5% interest? What if the interest rate is 15%? Find the present values again. a) b) Why should you use present value to compare these options instead of future value? 2. Which would you prefer to receive, if you can invest the funds at a 5% annual return? Find the present value for each option. a) $1,000 a year for 10 years, or b) $800 a year for 15 years at 5% interest? What if the interest rate is 15%? Find the present values again. a) b) Why should you use present value to compare these options instead of future value?

Answer rating: 100% (QA)

To compare the two options we need to calculate the present value of each cash flow stream a To calc... View the full answer