Question 7

Consider the following alternatives: $130 received in one year $200 received in five years $310 received in 10 years Rank the alternatives from most valuable to least valuable if the interest rate is 9% per year. What is your ranking if the interest rate is 1% per year? What is your ranking if the interest rate is 16% per year? Rank the alternatives from most valuable to least valuable if the interest rate is 9% per year. First calculate the present value (PV) of each alternative: The PV of $130 received in one year if the interest rate is 9% per year is $ (Round to the nearest cent.) The PV of $200 received in 5 years if the interest rate is 9% per year is $ (Round to the nearest cent.) The PV of $310 received in 10 years if the interest rate is 9% per year is $ (Round to the nearest cent.) Next, rank the choices by their PV: (Select the best choice below.) The ranking of the projects is: option ii > option iii > option i. The ranking of the projects is: option iii > option i > option ii. The ranking of the projects is: option iii > option ii > option iii The ranking of the projects is: option i> option ii > option