Problem 7-15

You are offered $700 after six years (Offer 1) or $100 a year for six years (Offer 2). If you can earn 5 percent on your funds, calculate the future values of both payments. Use Appendix C to answer the question. Round your answers to the nearest dollar.

FV_{(Offer 1)}: $ ________ FV_{(Offer 2)}: $ ________

Which offer will you accept? ________

If you can earn 16 percent on your funds, calculate the future values of both payments. Use Appendix C to answer the question. Round your answers to the nearest dollar. FV_{(Offer 1)}: $ _________ FV_{(Offer 2)}: $ _________

Which offer will you accept, if you can earn 16 percent on your funds? ___________