Suppose you are given the following options: (i): $7,500 today. $3,050 each year for 11 years....

  

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Suppose you are given the following options: (i): $7,500 today. $3,050 each year for 11 years. The first payment after year 2. (ii): $13,500 paid each year for 14 years. The first payment paid after 1 year. (iii): $3,800 paid each year for 15 years. The first payment after 5 years. The annual interest rate is 6%. Calculate present values of three options (please show work). Which one would you choose and why? Suppose you are given the following options: (i): $7,500 today. $3,050 each year for 11 years. The first payment after year 2. (ii): $13,500 paid each year for 14 years. The first payment paid after 1 year. (iii): $3,800 paid each year for 15 years. The first payment after 5 years. The annual interest rate is 6%. Calculate present values of three options (please show work). Which one would you choose and why?

Answer rating: 100% (QA)

To calculate the present values of the three options we can use the formula for the present value of ... View the full answer