Question: In his will, Frank's uncle has given Frank the choice between two alternatives: Alternative 1$2000 cash Alternative 2$150 cash now plus $100 per month for

In his will, Frank's uncle has given Frank the choice between two alternatives:

Alternative 1$2000 cash

Alternative 2$150 cash now plus $100 per month for 20 months beginning the first day of next month

(a) At what rate of return is the two alternatives equivalent?

(b) If Frank thinks the rate of return in (a) is too low, which alternative should he select?

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