Your grandfather has offered you a choice of one of the three following alternatives: $7,000 now; $2,000 a year for eight years; or $32,000 at the end of eight years. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.

a-1.	Assuming you could earn 9 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

	Present Value
$7,000	$
$2,000	$
$32,000	$

a-2.

Which alternative should you choose?

	$32,000 received at end of eight years
	$2,000 received each year for eight years
	$7,000 received now

b-1.	If you could earn 10 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

	Present Value
$7,000	$
$2,000	$
$32,000	$

b-2.

Which alternative should you choose?

	$32,000 received at end of eight years
	$2,000 received each year for eight years
	$7,000 received now