Question
Present value alternative [LO9-3] Your grandfather has offered you a choice of one of the three following alternatives: $12,500 now; $6,250 a year for seven
Present value alternative [LO9-3]
Your grandfather has offered you a choice of one of the three following alternatives: $12,500 now; $6,250 a year for seven years; or $81,000 at the end of seven years. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.
a-1. Assuming you could earn 11 percent annually, compute the present value of each alternative:
Note: Do not round intermediate calculations. Round your final answers to 2 decimal places.
Please provide step by step using a BaII Plus if it is feasible Thank you
a-2. Which alternative should you choose? $81,000 received at end of seven years $6,250 received each year for seven years $12,500 received now b-1. If you could earn 12 percent annually, compute the present value of each alternative: Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. b-2. Which alternative should you choose? $81,000 received at end of seven years $6,250 received each year for seven years $12,500 received now Answer is not complete. a-2. Which alternative should you choose? $81,000 received at end of seven years $6,250 received each year for seven years $12,500 received now b-1. If you could earn 12 percent annually, compute the present value of each alternative: Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. b-2. Which alternative should you choose? $81,000 received at end of seven years $6,250 received each year for seven years $12,500 received now Answer is not completeStep by Step Solution
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