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Unformatted text preview: $1,500 $1,500 $1,500 $1,500 ? $4,000 $4,000 $4,000 0 1 11 12 13 14 36 37 n = 12 quarters n = 25 quarters PV of 12 $4,000 payments is $41,031.06 PV of 25 $1,500 payments is $20,549.33 PV of 12 payments PV = ? FV = 0 PMT = 4000 n = 12 i = 2.5% PV of 25 payments at the beginning of year 13 = 27636.56 PV = ? FV = 0 PMT = 1500 n = 25 i = 2.5% PV of 27636.56 at the beginning of year 1 = 20549.33 PV = ? FV = 27636.56 PMT = 0 n = 12 i = 2.5% The present value of option (d) is $41,031.06 + $20,549.33, or $61,580.39 . Present values: (a) $55,000 . (b) $62,356.66. (c) $64,314.62. (d) $61,580.39 . Option (c) is the best option, based upon present values alone....
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This note was uploaded on 04/29/2011 for the course ACCT 3001 taught by Professor Erickson during the Spring '10 term at University of Minnesota Duluth.
 Spring '10
 Erickson

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