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Anne Investa is offered one of the following alternative cash flows: Alternative 1: $9,700 now. Alternative 2: $1,850 per year for the next 5 years.
Anne Investa is offered one of the following alternative cash flows:
- Alternative 1: $9,700 now.
- Alternative 2: $1,850 per year for the next 5 years.
- 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.
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