Marilyn's parents have agreed to help her purchase a new car upon graduation in four years. They have given her two choices. The first choice is that they will give her $3,910 each year for the next four years for her to invest herself. The second choice is that they will wait four years and give her $17,320. Marilyn can invest the money at a 5% rate.
a) Which option should Marilyn choose?
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Option 1
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Option 2
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Present value
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$13864.6665
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$14249.2069
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b) If Marilyn can invest the money at 7%, which options should she choose?