Unformatted text preview: A 3 . 10 (c) $2,700 (d) $3,000 3. Suppose that you can borrow and lend at 5%. You plan to spend $35,000 this year, and your employer is oﬀering to restructure your salary to best ﬁt your needs. Which of the following options should you take? (a) $35,000 this year and $85,000 next year (b) $50,000 this year and $70,000 next year (c) $100,000 this year and $20,000 next year  Highest PV (d) Doesn’t matter, since you can borrow and lend at the same rate Helpful formulae: • Net Present Value = C + ∑ T t =1 C t (1+ r ) t • Annuity: PV = C r ‡ 11 (1+ r ) t ·...
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 Spring '08
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 Time Value Of Money, $2,500, $1,000, $2,700, $2,250

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