Assuming an interest rate of 6 determine the present

This preview shows page 2 - 3 out of 3 pages.

Assuming an interest rate of 6%, determine the present value for the above options. Which option should Alex choose?(Round your final answers to nearest whole dollar amount.)Required 1Required 2AnnuityPaymentPV AnnuityImmediateCashPV OptionOption 1$0$0+$64,000=$64,000Option 2$8,000$39,339+$20,000=$59,339Option 3$13,000$63,925+=$63,925Which option should Alex choose?Option 1Hint #1ReferencesWorksheetLearning Objective: 05-03Compute the present valueof a single amount.Learning Objective: 05-08 Compute the present value ofan ordinary annuity, an annuity due, and a deferredannuity.Difficulty: 2 MediumLearning Objective: 05-07Compute the future value ofboth an ordinary annuity andan annuity due.Answer each of the following independent questions.Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $64,000 cash immediately, (2)Hints
$20,000 cash immediately and a six-period annuity of $8,000 beginning one year from today, or (3) a six-period annuity of $13,000beginning one year from today. (FV of $1,PV of $1,FVA of $1,PVA of $1,FVAD of $1andPVAD of $1)(Use appropriate factor(s)from the tables provided.)1.Assuming an interest rate of 6%, determine the present value for the above options. Which option should Alex choose?2.The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2030. Weimer will make
End of preview. Want to read all 3 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
NoProfessor

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture