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Your grandfather has offered you a choice of one of the three following altermatives: $8,500 now; $3,000 a year for five years; or $41,000 at
Your grandfather has offered you a choice of one of the three following altermatives: $8,500 now; $3,000 a year for five years; or $41,000 at the end of five 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 8,500 3,000 41,000 a 2. Which alternative should you choose? $41,000 received at end of five years $3,000 received each year for five years $8,500 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 8,500 3.000 41,000
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