Question: Your grandfather has offered you a choice of one of the three following alternatives: $5,500 now; $1,250 a year for five years; or $17,000 at the end of five years. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.
a-1. Assuming you could earn 6 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
a-2. Which alternative should you choose? $17,000 received at end of five years $1,250 received each year for five years $5,500 received now
b-1. If you could earn 7 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
b-2. Which alternative should you choose? $17,000 received at end of five years $1,250 received each year for five years $5,500 received now eBook & Resources eBook: Present Value-Annuity eBook: Present Value-Single Amount ©2017 McGraw-Hill Education. All rights reserved.