SOLVE IT PLZ Evaluate the following cash flows (at 5.0% interest rate) Option 1:

Question

SOLVE IT PLZ

Evaluate the following cash flows (at 5.0% interest rate) Option 1: Receive $15000 today; option 2: Receive $30,000 in ten years; Option 3: Receive $3000 each year for the next ten years What is the present worth of option 3? Select one: a. $38000.56 b. $23165.20 c. $21600.50 d. $10800.25 Evaluate the following cash flows (at 5.0% interest rate) Option 1: Receive $15000 today; Option 2: Receive $30,000 in ten years; Option 3: Receive $3000 each year for the next ten years What is the future worth of option 3? Select one: a. $37733.68 b. $47756.67 c. $27765.23 d. $80833.45

Explanation / Answer

present value option 3 value = 3000 * [1-(1.05)^-10]/0.05 = 23165.20

answer is b

FV of option 3 = 3000 * [(1+0.05)^10-1]/0.05 = 37733.68

answer is a

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