Ask Experts Questions for FREE Help !
Ask
    munaidu's Avatar
    munaidu Posts: 6, Reputation: 1
    New Member
    		  
    #1

    Aug 25, 2007, 08:08 PM
    Present Value and Future Value
    A rich godfather has offered you a choice of one of the three following alternatives: $10,000 now; $2,000 a year for eight years; or $24,000 at the end of eight years. Assuming you could earn 11 percent annually, which alternative should you choose? If you could earn 12 percent annually, would you still choose the same alternative?
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
    Expert
    		  
    #2

    Aug 25, 2007, 08:15 PM
    Home work, what do you think, how did you come to your answer, we are glad to help you, not just give you answers.

    Also no one is getting 11 percent now, big give away.
    munaidu's Avatar
    munaidu Posts: 6, Reputation: 1
    New Member
    		  
    #3

    Aug 25, 2007, 10:54 PM
    Quote Originally Posted by munaidu
    A rich godfather has offered you a choice of one of the three following alternatives: $10,000 now; $2,000 a year for eight years; or $24,000 at the end of eight years. Assuming you could earn 11 percent annually, which alternative should you choose? If you could earn 12 percent annually, would you still choose the same alternative?
    Please validate my attempt and correct me if I am wrong.

    Choice A $ 10000 now
    Choice B $ 26328 @ 11%, $2000 per month for 8 years (I calculated this using the PV formula for each year and added them all... sme for the next line)
    Choice C $ 27551 @ 12%, $2000 per month for 8 years
    Choice D $24000 at the end of 8 years

    I chose - Choice C. Are my calculations correct and is my choice correct?
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Future and present value [ 2 Answers ]

Your rich godfather has offered you a choice of one of the three following alternatives: $10, 000 now; $2,000 a year for eight years: or $24,000 at the end of eight years. Assuming you could earn 11 percent annually, which alternative should you choose? If you could earn 12 percent annually,...

Present Value - Future Values [ 1 Answers ]

find the interest rate of the following combinations of present and future values: Present value years future values $400 11 $684 $183 4 $249 $300 7 $300

Present and Future value of annuties [ 1 Answers ]

Hi, I was wondering if someone could please help me with these 3 finance questions. It would be must appreciated 1. you receive payments of 1000 dollars every 8 month for the next 9 years. The first payment will occur 8 months from today. There will be a total of 12 payments. What is the present...

View more questions Search