Anne Investa is offered one of the following alternative cash flows:

1. Alternative 1:$9,700 now.
2. Alternative 2:$1,850 per year for the next 5 years.
3. Alternative 3:$21,000 at the end of 8 years.

If the interest rate on all investments is 10% p.a. compounded monthly, which alternative should Anne choose? Assume end-of-the-period cash flows.

Answer rating: 100% (QA)

To determine the best alternative for Anne we need to find the present value PV of each option and c... View the full answer