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Question 2 (30 points) Assume that you receive a check of $2,500 on your 25th birthday five years from now (Year 5). You plan to
Question 2 (30 points) Assume that you receive a check of $2,500 on your 25th birthday five years from now (Year 5). You plan to put that money in the bank at 2% interest. How much money will you have in the bank on your 30th birthday (Year 10) based on this investment? Do you have enough information to calculate the present values of this investment? Make reasonable assumptions if anything is missing. Question 3 (20 points) Assume you can choose one of the following payment alternatives for a project that you finished: - Receiving $4,950 five years from now (Year 5) - Receiving $1,950 each year at the end of Year 1,2,3, and 4. - Receiving $2,950 right now (at the present time) Find the best payment alternative assuming the following interest/discount rates - 8% discount/interest rate - 20% discount/interest rate
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