Homework Answers
The option with highest present value today should be chosen
Present values will be as follows:
Option 1 = 1,000,000*PVF(8%, 10 years)
= 1,000,000*0.4632
= $463,200
Option 2 = 100,000*PVAF(8%, 10 years)
= 100,000*6.7101
= $671,010
Option 3 = $675,000
Hence, Option 3 should be chosen
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