21.

Is it more profitable to receive a lump sum of

$13,000

at the end of

5

years or to receive

$650

at the end of each quarter-year for

5

years? Assume that the money can earn

2.5%

interest compounded quarterly.

Question content area bottom

Part 1

Choose the correct answer below.

A.It is more profitable to receive a lump sum of

$13,000

at the end of

5

years, because the future value of receiving

$650

each quarter for

5

years is higher than the future value of recieving a lump sum of

$13,000

at the end of

5

years.

B.It is more profitable to receive a lump sum of

$13,000

at the end of

5

years, because the future value of recieving a lump sum of

$13,000

at the end of

5

years is higher than the future value of receiving

$650

each quarter for

5

years.

C.It is more profitable to receive

$650

each quarter for

5

years, because the future value of recieving a lump sum of

$13,000

at the end of

5

years is higher than the future value of receiving

$650

each quarter for

5

years.

D.It is more profitable to receive

$650

each quarter for

5

years, because the future value of receiving

$650

each quarter for

5

years is higher than the future value of recieving a lump sum of

$13,000

at the end of

5

years.