Business, 15.10.2020 14:01 mmmmm96061

Your grandfather has offered you a choice of one of the three following alternatives: $6,500 now; $1,750 a year for seven years; or $27,000 at the end of seven years. Required:
a. Assuming you could earn 10 percent annually, compute the present value of each alternative.
b. Which alternative should you choose?

1. $27,000 received at end of seven years
2. $1,750 received each year for seven years
3. $6,500 received now

c. If you could earn 11 percent annually, compute the present value of each alternative.
d. Which alternative should you choose?

1. $27,000 received at end of seven years
2. $1,750 received each year for seven years
3. $6,500 received now

Answers: 2

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Your grandfather has offered you a choice of one of the three following alternatives: $6,500 now; $1...

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