Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

What does it have to be Which option is better: receive S140,000 now or $50,000, $25,000, $55,000, $10,000, and S30,000, respectively, over the next five

image text in transcribedimage text in transcribedimage text in transcribedWhat does it have to be

Which option is better: receive S140,000 now or $50,000, $25,000, $55,000, $10,000, and S30,000, respectively, over the next five years? (Assume the annual payments occur at the end of each year.) (Click the icon to view Present Value of $1 table.)(Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements. Assuming a 7% interest rate, which investment o y would ou choose? present value C Requirement dollar.) ur us ables use actor amounts rounded to ree decima places, ound your na answer The present value of the five payments is $ 142.479. Since the present value of the five payments is higher than the one payment of $140,000, you should choose the option payments over the five years. with Requirement 2 lf ou could earn 8%, would your choice change? If using present value tables, se factor amounts rounded to hree decimal places, X XXX Round your final answer to the nearest whole dollar. If you could earn 8%, the present value of the five payments would be s payments is lower than the one payment of $140,000, you should choose the option with Requirement 3, Assuming an 8% interest rate, what would the cash flow in year 5 have to be in order for you to be indifferent to the two plans? f using present value tables use factor amounts rounded to three de 139,175.Since the present value of the five one payment now. Round your final answer to the nearest whole dollar.) lf you could earn 8%, the cash flow in year 5 would have to be S for you to be indifferent to the two plans

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Information System Audit How To Control The Digital Disruption

Authors: Philippe Peret

1st Edition

1032136162, 978-1032136165

More Books

Students also viewed these Accounting questions