Question
Overdue Books You have an $3,000 overdue debt for business textbooks at Gator Bookstore. Unfortunately, you have only $1,000 in your checking account. Since
Overdue Books You have an $3,000 overdue debt for business textbooks at Gator Bookstore. Unfortunately, you have only $1,000 in your checking account. Since you cannot pay the entire balance owed now, the bookstore gives you two options to settle your debt: 1. Option 1: Pay $1,000 now and $2,400 when you graduate (which will be two years from today). 2. Option 2: Pay $3,900 one year after you graduate (which will be three years from today). 8 10 points * Assuming an 8% interest rate, compounded annually, what is the present value of Option 1? Type your answer... 9 10 points * Assuming an 8% interest rate, compounded annual, what is the present value of Option 2? Type your answer... 10 10 points Assuming that the value of money is the only factor in your decision, which option should you choose to settle your debt? Option 2 Both options are equal. Option 1
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