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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 oering to restructure your salary to best t 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) Doesnt 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 1-1 (1+ r ) t...
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- Spring '08