Computing a Present Value Involving an Annuity and a Single Payment You have decided to buy a used car. The dealer has offered you two options: a. Pay $500 per month for 20 months and an additional $12,000 at the end of 20 months. The dealer is charging an annual interest rate of 24 percent. b. Make a one-time payment of $14,906, due when you purchase the car. In present value terms, which offer is a better deal? page 510 E9-18 LO9-7 Using Present Value Concepts for Decision Making You have just won the state lottery and have two choices for collecting your winnings. You can collect $100,000 today or receive $20,000 at the end of each year for the next seven years. A financial analyst has told you that you can earn 10 percent on your investments. Which alternative should you select