Question

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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