You are presented with two cash flow options: Option Near, a $5,000 annuity for three years, with
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Question:
You are presented with two cash flow options: Option Near, a $5,000 annuity for three years, with the first cash flow one year from today, or Option Far, a $5,000 annuity for six years with the first cash flow ten years from today. Assuming an interest rate of 7.0%, which set of cash flows has a greater present value?
Select one:
a. Option Far has a greater PV of $13,121.58 vs. Option Near PV of $12,963.41.
b. Option Near has a greater PV of $13,121.58 vs. Option Far PV of $12,963.41.
c. Option Far has a greater PV of $30,000 vs. Option Near PV of $15,000.
d. Option Near and Option Far have the same PV of $12,963.41.
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