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you have been given the option to receive a one-time cash payment today of $10,000, or...

you have been given the option to receive a one-time cash payment today of $10,000, or a payment of $2,500 each year for 5 years beginning next year. How much more or less are the five payments worth in present value than the immediate payment at a cost of capital of 5.5%?

A. 1,234.54 more

B. 555.42 less

C. 423.22 less

D. 675.71 more

E. 721.21 less

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Answer #1

Answen Case 1- 10,000 fayment teday Case 2 3$25oo each yea next Present Value in Case 2 = CFI Cf2 Cf3 cfy + -+ + Cfs L+1)3 CI

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