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An obligation can be settled by making a payment of $1,500 now and a final payment of $11,000 in seven years (Alternative 1). Alternatively, the
An obligation can be settled by making a payment of $1,500 now and a final payment of $11,000 in seven years (Alternative 1). Alternatively, the obligation can be settled by payments of S1,000 at the end of every six months for nine years (Alternative 2). Interest is 10% compounded semi-annually. Compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow criterion. The present value of Alternative 1 is $ (Round to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.)
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