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?

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.

Quote:

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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?

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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?