Your grandfather has offered you a choice of one of the three following alternatives: $7,500 now; $2,200 a year for nine years; or $31,000 at the end of nine 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 10 percent annually, compute the present value of each alternative:

$7,500	Present Value:
$2,200	Present Value:
$31,000	Present Value:

a-2. Which alternative should you choose?

$31,000 received at end of nine years.

$2,200 received each year for nine years.

$7,500 received now.

b-1. If you could earn 11 percent annually, compute the present value of each alternative:

Present Value

$7,500 _________

$2,200 __________

$31,000 __________

b-2. Which alternative should you choose?

$31,000 received at end of nine years.

$2,200 received each year for nine years.

$7,500 received now.