You are negotiating the terms of a legal settlement and your opponent's attorney has presented

you with the following alternative settlement arrangements:

a. $38,000 today in one lump sum

b. $50,000 to be paid to you in five equal payments of $10,000 at the end of each of the

next 5 years.

c. Five equal annual installments of $9,100 each, beginning today.

Assume your discount rate is 10%

48. The present value of option (a) is $38,000.

A) True

B) False

49. What is the present value of option (b)?

A) $13,189.87

B) $37,907.87 C) $41,698.65

D) $50,000

50. Which of the alternatives should you choose?

A) a

B) b

C) c