Which of the following alternatives would you rather receive, assuming an interest rate of 8% per year, compounding annually? (You want to choose the option with the greatest monetary value) a. Receive 100 USD now b. Receive 120 USD in two years c. Receive 123 USD in three years d. Receive 125 USD in ten years
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Which of the following alternatives would you rather receive, assuming an interest rate of 8%
per year, compounding annually?
(You want to choose the option with the greatest monetary value)
Step by step
Solved in 2 steps
- 2. Which of the following alternatives would you rather receive, assuming an interest rate of 8% per year? Alternative 1: Receive $100 today: Alternative 2: Receive $120 two years from nowWhich of the following options would you choose assuming an annual compound interest rate of 8%? A. Alternative 1: Receive $ 100 today. B. Alternative 2: Receive $ 120 in two years.b. Suppose that you are given two options to choose. Offer A offers you a monthly payment of $10,000 per year for 10 years (paid annually at the beginning of each year) or a lump sum of $x now. Determine the minimum value of x that would induce you to accept the lump sum given the current market interest rate of 5%.
- You have RM 5,000.00 you want to invest for the next 45 years until retirement. You are offered an investment plan that will pay you 6 percent per year for the next 15 years and 10 percent per year for the last 30 years.a) Explain the time value of money principleb) Identify the underlying assumption of the time value of money principlec) Draw a graph that illustrates the relationship between interest rates and the present value of RM 1,000.00 to be received in one year.d) Suggest how you can minimize the amount of cash you must invest in order to reach your retirement goal.e) Compute the amount you will have at the end of the 45 years.f) Calculate the amount you would have if the investment plan pays 10 percent for the first 15 years and 6 percent per year for the next 30 years.You are considering purchasing an annuity that would pay you $1,000 per year for 10 years. The interest rate is 5%. Out of the choices below, what would be an reasonable price to pay for that annuity? Question options: a $8,200 b $9,100 c $7,600 d $10,000You can choose to take $105,000 in 11 years or $47,000 today. At an interest rate of 9 percent, what is the value of $105,000 now? (Enter your answer as a positive number rounded to 2 decimal places.) a-2. Which option should be selected? $105,000 in 11 years O $47,000 today b-1. Assume an interest rate of 9 percent for 8 years. If the choice is $105,000 in 8 years or $47,000 today, how much is the $105,000 worth today? (Enter your answer as a positive number rounded to 2 decimal places.) b-2. Which option should be selected now? $105,000 in 8 years O $47,000 today
- If you invest $9,700 per period for the following number of periods, how much would you have received at the end? Use Appendix C. (Round "Factor" to 3 decimal places. Round the final answers to the nearest whole dollar.) a. 11 years at 9 percent Future value $ b. 16 years at 11 percent Future value $ c. 30 periods at 10 percent Future value $Your brother has offered to give you either $60,000 today or $120,000 in 10 years. If the interest rate is 6% per year, which option is preferable? CHD The present value of the future amount (amount received in 10 years) is $ (Round to the nearest dollar.)What's the future value of $20,000 after 8 years if the appropriate interest rate is 5.75%, compounded annually?Round your answer to two decimal places. For example, if your answer is $345.667 enter as 345.67 and if your answer is .05718 or 5.718% enter as 5.72 in the answer box provided. Group of answer choices
- If you invest $9,400 per period for the following number of periods, how much would you have received at the end? ( Use a Financial calculator to arrive at the answers. Round the final answers to the nearest whole dollar.) a. 12 years at 6 percent. Future value $ b. 18 years at 8 percent. Future value $ c. 25 periods at 16 percent. Future value $Consider the following three options: (1) receive a one-time payment $102 now, (2) receive a one-time benefit of $115 in 5 years (from now), (3) receive $2 every year forever. If the yearly discount rate is 2%, which option would yield the most revenue? O option 3 O option 2 O option 1 O options 1 and 3You may purchase an annuity that will pay you ¥300,000 in income per year starting one year from now and continuing for a total of 22 years, or 22 payments. Assuming an annual risk-free interest rate of 4%. What is a fair price for this annuity? Round your answer to the nearest yen