You can choose one of the following prizes:(a) $100,000 now(b) $170,000 at the end of 4 years(c)
Question:
You can choose one of the following prizes:(a) $100,000 now(b) $170,000 at the end of 4 years(c) $11,600 a year forever(d) $6,000 next year and increasing thereafter by 5% a year forever(e) $18,000 per year starting next year for 10 years(f) $20,000 next year, increasing thereafter by 3% a year and stopping after the 7th paymentIf the interest rate is 12%, use the present value to find which prize is the most valuable.Group of answer choices$18,000 per year starting next year for 10 years$170,000 at the end of 4 years$6,000 next year and increasing thereafter by 5% a year forever$100,000 now$20,000 next year, increasing thereafter by 3% a year and stopping after the 7th payment$11,600 a year forever
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers