Consider the following alternatives: i. $110 received in one year ii. $240 received in five years iii. $340 received in 10 years a. Rank the alternatives from most valuable to least valuable if the interest rate is 7% per year. b. What is your ranking if the interest rate is 3% per year? c. What is your ranking if the interest rate is 15% per year? a. Rank the alternatives from most valuable to least valuable if the interest rate is 7% per year. First calculate the present value (PV) of each alternative: The PV of $110 received in one year if the interest rate is 7% per year is $ - (Round to the nearest cent.) The PV of $240 received in 5 years if the interest rate is 7% per year is $ (Round to the nearest cent.) The PV of $340 received in 10 years if the interest rate is 7% per year is $. (Round to the nearest cent.) Next, rank the choices by their PV: Select the best choice below.) OA. The ranking of the projects is: option ii > option iii > option i. OB. The ranking of the projects is: option ili > option ii > option i. OC. The ranking of the projects is: option i > option ii > option iii. OD. The ranking of the projects is: option ii > option i > option ii. b. What is your ranking If the interest rate is only 3% per year? First calculate the present value (PV) of each alternative: The PV of $110 received in one year if the interest rate is 3% per year is $. (Round to the nearest cent.) The PV of $240 received in 5 years if the interest rate is 3% per year is $. (Round to the nearest cent.) The PV of $340 received in 10 years if the interest rate is 3% per year is $. (Round to the nearest cent.) Next rank the choices by their PV: (Select the best choice below.) O A. The ranking of the projects is: option ii > option i > option ii. OB. The ranking of the projects is: option ii > option iii > option i. OC. The ranking of the projects is: option i > option ii > option iii. OD. The ranking of the projects is: option ili > option il > option i. c. What is your ranking if the interest rate is 15% per year? First calculate the present value (PV) of each alternative: The PV of $110 received in one year if the interest rate is 15% per year is $(Round to the nearest cent.) The PV of $240 received in 5 years if the interest rate is 15% per year is $. (Round to the nearest cent.) The PV of $340 received in 10 years if the interest rate is 15% per year is $. (Round to the nearest cent.) Next rank the choices by their PV: (Select the best choice below.) O A. The ranking of the projects is: option ii > option ii > option
