Consider the following alternatives: 1. $120 received in one year ii. $220 recelved in five years iii. $320 recelved in 10 years a. Rank the alternatives from most valuable to least valuable if the interest fate is 8% per year, b. What is your ranking if the interest rate is only 4% per year? c. What is your ranking if the interest rate is 17% per year? a. Rank the alternatives from most valuable to least valuable if the interest rate is 8% per. year. First calculate the present value (PV) of each alternative: The PV of $120 received in one year if the interest rate is 8% per year is $ (Round to the nearest cent.) The PV of $220 received in 5 years if the interest rate is 8% per year is $ (Round to the nearest cent.) The PV of $320 received in 10 years if the interest rate is 8% per year is $ (Round to the nearest cent.) Next, rank the choices by their PV: (Select the best choice below.) A. The ranking of the projects is: option i> option iii > option ii. B. The ranking of the projects is: option ii > option iii > option i. C. The ranking of the projects is: option iii > option ii > option i. D. The ranking of the projects is: option ii > option i> option iii. b. What is your ranking if the interest rate is only 4% per year? First calculate the present value (PV) of each alternative: The PV of $120 received in one year if the interest rate is 4% per year is $ (Round to the nearest cent.) The PV of $220 received in 5 years if the interest rate is 4% per year is $. (Round to the nearest cent.) The PV of $320 received in 10 years if the interest rate is 4% per year is $ (Round to Next rank the choices by their PV: (Select the best choice below.) A. The ranking of the projects is: option iii > option ii > option i. B. The ranking of the projects is: option ii > option iii > option i. C. The ranking of the projects is: option iii > option i> option ii. D. The ranking of the projects is: option i> option ii > option iii. c. What is your ranking if the interest rate is 17% per year? First calculate the present value (PV) of each alternative: The PV of $120 received in one year if the interest rate is 17% per year is $ (Round to the nearest cent.) The PV of $220 received in 5 years if the interest rate is 17% per year is $ (Round to the nearest cent.) The PV of $320 received in 10 years if the interest rate is 17% per year is $ (Round to the nearest cent.) Next rank the choices by their PV: (Select the best choice below.) A. The ranking of the projects is: option iii > option ii > option i. B. The ranking of the projects is: option ii> option i> option iii. C. The ranking of the projects is: option i> option ii > option iii. D. The ranking of the projects is: option i> option iii > option
