Question
You have won an accident settlement in court and can choose between the following choices of payment plans: A: $10,000 immediately and $10,000 at the
You have won an accident settlement in court and can choose between the following choices of payment plans: A: $10,000 immediately and $10,000 at the end of each year for 7 years B: $60,000 immediately C: $20,000 immediately and $20,000 at the end of each year for 3 years If we are not sure of the discount rate, but we know it is greater than Rf, mark each of the following true (T) or false (F):
____ a. Plan A will never have the highest present value among plans A,B & C
____ b. For a very low discount rate, plan C will have the highest present value
____ c. If you calculate the future value in time 10 for each plan, the plan with the highest present value will also have the highest future value.
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