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Appendix B: http://lectures.mhhe.com/connect/0073530727/Images/Appendix_B.jpg Appendix D: http://lectures.mhhe.com/connect/0073530727/Images/Appendix_D.JPG Your grandfather has offered you a choice of one of the three following alternatives: $9,500 now, $4,000 a year

Appendix B: http://lectures.mhhe.com/connect/0073530727/Images/Appendix_B.jpg

Appendix D: http://lectures.mhhe.com/connect/0073530727/Images/Appendix_D.JPGimage text in transcribed

Your grandfather has offered you a choice of one of the three following alternatives: $9,500 now, $4,000 a year for seven years or $57,000 at the end of seven years. Use Appendix B and AppendixD (a-1) Assuming you could earn 10 percent annually, compute the present value for the following amounts? (Round "PV Factor" to 3 decimal places and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Present value $9,500 $4,000 $57,000 (a-2) Which alternative should you choose? $57,000 received at end of seven years $4,000 received each year for seven years $9,500 received now (b-1) If you could earn 11 percent annually, compute the present value for the following amounts? (Round "PV Factor" to 3 decimal places and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Present value $9,500 $4,000 $57,000 (b-2) Which alternative should you choose? $57,000 received at end of seven years $4,000 received each year for seven years $9,500 received now

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