Consider the following alternatives: i. $140 received in one year ii. $240 received in five years iii. $300 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 6% per year? c. What is your ranking if the interest rate is 16% 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 $140 received in one year if the interest rate is 7% per year is s (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 $300 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.) O A. The ranking of the projects is: option ii > option i > option iii. O B. The ranking of the projects is: option ii > option ii > option i. O C. The ranking of the projects is: option i > option iii > option ii. OD. The ranking of the projects is: option ii > option ii > option i. b. What is your ranking if the interest rate is only 6% per year? First calculate the present value (PV) of each alternative: The PV of $140 received in one year if the interest rate is 6% per year is s (Round to the nearest cent.) The PV of $240 received in 5 years if the interest rate 6% per year is $. (Round to the nearest cent.) The PV of $300 received in 10 years if the interest rate is 6% 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 i > option ii > option ii. OB. The ranking of the projects is: option iii > option ii > option i. OC. The ranking of the projects is: option ii > option i > option iii. OD. The ranking of the projects is: option ii > option ii > option i. c. What is your ranking if the interest rate is 16% per year? First calculate the present value (PV) of each alternative The PV of $140 received in one year if the interest rate is 16% per year is $. (Round to the nearest cent.) The PV of $240 received in 5 years if the interest rate is 16% per year is $ (Round to the nearest cent.) The PV of $300 received in 10 years if the interest rate is 16% 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 i > option iii > option ii. OB. The ranking of the projects is: option i > option ii > option iii. OC. The ranking of the projects is: option ii > option ii > option i. OD. The ranking of the projects is: option ii > option i > option
