Question
1. Frank Rizzo is considering two investment options with seven-year lives. Option one pays $250 every quarter, the other pays $500 semi-annually. The option with
1. Frank Rizzo is considering two investment options with seven-year lives. Option one pays $250 every quarter, the other pays $500 semi-annually. The option with the better value would be: A. $250 every quarter. B. Both options are equally attractive. C. $500 semi-annually.
2. Darius Rucker is leaving Theta Tech after several years. During his time at Theta he accumulated a deferred payroll benefit. He must choose between a lump-sum distribution or annual payments over the next 10 years, with his first payment deposited today. He believes he can invest any sum received at 5.15% for the next ten years. The annual payments are $12,500 and the lump-sum distribution is $105,000. To the nearest dollar, the more valuable choice is: A. The annual payments. B. The lump-sum distribution. C. Both choices have the same value.
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