Your grandfather would like to share some of his fortune with you. He offers to give you
Question:
1. $8,000 per year at the end of each of the next five years
2. $50,250 (lump sum) now
3. $100,250 (lump sum) five years from now
Requirements
1. Calculate the present value of each scenario using an 8% discount rate. Which scenario yields the highest present value?
2. Would your preference change if you used a 12% discount rate?
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Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
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