Your grandfather has offered you a choice of one of the three following alternatives: $10,000 now; $4,800 a year for eight years; or $56,000 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.)

a-2. Which alternative should you choose?

multiple choice 1

• $56,000 received at end of eight years

• $4,800 received each year for eight years

• $10,000 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.)

b-2. Which alternative should you choose?

multiple choice 2

• $56,000 received at end of eight years

• $4,800 received each year for eight years

• $10,000 received now