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5. Zoom is thinking about two different investments options each for 4 years and interest rate is 5% annually: Option A: Receive four end of

5. Zoom is thinking about two different investments options each for 4 years and interest rate is 5% annually: Option A: Receive four end of year payments each of $3,000. Option B: Receive four payments of $2,000, $3,000, $5,000 and $2,000 for the first, second, third and fourth year respectively. Which option has the higher present value?*

a) Option A

b) Option B

c) Both options have the same present value

d) All of the above

e) None of the above

6. Your grandfather just died and left you $100,000 in a trust fund that pays 9.5% interest. You must spend the money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately. How much could you withdraw today and at the beginning of each of the next 3 years and end up with zero in the account?*

a) $24,736

b) $26,038

c) $27,409

d) $28,779

e) None of the above

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