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Eichelberger Trucking won a settlement in a lawsuit and was offered four different payment alternatives by the defendants insurance company. The interest rate is 8%.
Eichelberger Trucking won a settlement in a lawsuit and was offered four different payment alternatives by the defendants insurance company. The interest rate is 8%. Ignoring the tax considerations, which of the following four alternatives has the highest present value (and thus is the best option)? Support your answer with the appropriate calculations.$180,000 now.$70,000 per year for the next 4 years (end-of-year payments)$15,000 now and then $33,000 per year for the next 10 years (end-of-year payments). Hint: Calculate the present value of the initial $15,000 separately. Then calculate the present value the $33,000 annuity separately. Finally, add the two present value amounts together to get the overall present value.$17,000peryearforthenext10years(endofyearpayments)plusalumpsumpaymentof$245,000attheendofthe11thyear.Hint:Calculatethepresentvalueofthe$17,00010-yearannuityseparately.Thencalculatethepresentvaluethe$245,000paymentreceivedattheendofyear11separately.Finally,addthetwopresentvalueamountstogethertogettheoverallpresentvalue.please use the value that are on my
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