Question: Your aunt would like to share some of her fortune

Your aunt would like to share some of her fortune with you. She offers to give you money under one of the following scenarios (you get to choose):
1. $ 8,550 a year at the end of each of the next eight years
2. $ 50,250 (lump sum) now
3. $ 99,350 (lump sum) eight years from now
Calculate the present value of each scenario using a 8% interest rate. Which scenario yields the highest present value? Would your preference change if you used a 12% ­interest rate?




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  • CreatedAugust 27, 2014
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