Your grandfather has offered you a choice of one of the three alternatives Option 1 Option 2 Option 3 $5000 today $1000 a year for eight years $12000 at the end of eighth year a Assume you can earn 11 annually which option you will choose b Assume you can earn 12 annually which option you will choose

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Your grandfather has offered you a choice of one of the three alternatives Option 1 Option 2 Option 3 $5000 today $1000 a year

Your grandfather has offered you a choice of one of the three alternatives

Option 1	Option 2	Option 3
$5000 today	$1000 a year for eight years	$12000 at the end of eighth year.

a. Assume you can earn 11% annually which option you will choose.

b. Assume you can earn 12% annually which option you will choose.

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To determine which option you should choose we need to compare the present value PV of each option under the given interest rates The present value is ... blur-text-image

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