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Your grandfather has offered you a choice of one of the three following alternatives: $7,500 now:...


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 formula and financial calculator methods. e years. Use Appendix 8 and Appendix D for an approximate answer, but calculate your final answer using a-1. Assuming you coul calculations. Round your final answers to 2 decimal places.) d earn 10 percent annually, compute the present value of each alternative: (Do not round intermediate Present Value $7,500 $2,200 $31,000 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: (Do not round intermediate calculations Round your final answers to 2 decimal places.) Present Value $7,500 < Prev 3of4 Hi Next >
3 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 ints b-1. If you could earn 11 percent annually, compute the present value of each alternative: (Do not round intermediate calculations Round your final answers to 2 decimal places.) Hint Present Value 57,500 $2,200 $31,000 Print b-2. Which alternative should you choose? $31,000 received at end of nine years $2.200 received each year for nine years. C $7500 received now, Prey 3 of 4 Next
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 formula and financial calculator methods. e years. Use Appendix 8 and Appendix D for an approximate answer, but calculate your final answer using a-1. Assuming you coul calculations. Round your final answers to 2 decimal places.) d earn 10 percent annually, compute the present value of each alternative: (Do not round intermediate Present Value $7,500 $2,200 $31,000 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: (Do not round intermediate calculations Round your final answers to 2 decimal places.) Present Value $7,500 < Prev 3of4 Hi Next >
3 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 ints b-1. If you could earn 11 percent annually, compute the present value of each alternative: (Do not round intermediate calculations Round your final answers to 2 decimal places.) Hint Present Value 57,500 $2,200 $31,000 Print b-2. Which alternative should you choose? $31,000 received at end of nine years $2.200 received each year for nine years. C $7500 received now, Prey 3 of 4 Next
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A-1

present value

7500

-7500

present value of alternative 2 = Using present value function in MS excel

pv(rate,nper,pmt,fv,type) rate =10% nper = 9 pmt = 2200 fv = 0 type =0

PV(10%,9,2200,0,0)

($12,669.85)

present value of alternative 3 = Using present value function in MS excel

pv(rate,nper,pmt,fv,type) rate =10% nper = 9 pmt = 0 fv = 31000 type =0

PV(10%,9,0,31000,0)

($13,147.03)

A-2

alternative 3 -

31000 received at the end of year 9

b-2

present value

7500

-7500

present value of alternative 2 = Using present value function in MS excel

pv(rate,nper,pmt,fv,type) rate =11% nper = 9 pmt = 2200 fv = 0 type =0

PV(11%,9,2200,0,0)

($12,181.50)

present value of alternative 3 = Using present value function in MS excel

pv(rate,nper,pmt,fv,type) rate =10% nper = 9 pmt = 0 fv = 31000 type =0

PV(11%,9,0,31000,0)

($12,118.67)

b-2

alternative 2 -

22000 received each year for 9 years

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