There are 3 options that you have to choose - 94864

Solution Posted by
Solution Detail
Price: $10.00
Request Description
There are 3 options that you have to choose. First, you can receive $100,000.00 per year for the next 2 years. Second, you can receive 27,000.00 cash today plus 85,000.00 per year for the next 2 years. Or you can receive $9,500 per year in perpetuity. The interest rate is 5% compounded monthly. Which option would you take? Explain why and show all formula and workings.
Solution Description

For each option, we calculate the PV and then compare them.

Option 1: