Tim Gillespie Week 4 Disc Ch 9 #27

Tim Gillespie Week 4 Disc Ch 9 #27 - the highest out of the...

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Tim Gillespie Chapter 9 Problem 27 $10,000 Now $2,000 For 8 yrs $24,000 8 yrs from now Years Interest RatePresent Value Option 1 $10,000.00 Get Now 11% $10,000.00 No formula, $10,000 cash now Option 2 $2,000.00 8 11% $10,292.25 PV = 2000 * 5.146 Option 3 $24,000.00 8 11% $10,414.24 PV = 24,000 * .4339 At 12% Years Interest RatePresent Value Option 1 $10,000.00 Get Now 12% $10,000.00 No forumla, $10,000 cash now Option 2 $2,000.00 8 12% $9,935.28 PV = 2000 * 4.968 Option 3 $24,000.00 8 12% $9,693.20 PV = 24,000 * .40389 I would choose option 3, as the present value of the cash is
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Unformatted text preview: the highest out of the three. At 12% interest rate, I would choose option 1. The reason is because the $10,000 cash a greater cash flow and present value. One condition that would cause me to change my mind on these choices, is how bad I needed the money. If I really needed the money right away for school or to buy something, I might just take the $10,000 right away no matter what these options were....
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