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Personal Finance Problem P5-16 Time value comparisons of single amounts In exchange for a $23,000 payment company will allow you to choose one of the alsematives roday, a well-known shown in the following table. Your opmrm ow is 9%. Simgle anmo 528,500 at end of 3 years 554.000 at end of 9 ycars 5160,000 at end of 20 years a. Find the value today of each alternative. h. Are all the alternatives acceptable? That is, are they worth $23,000 today? c Which alternative, if any, will you take? Personal Finance Problem

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solution: Part a: Alternative A: PV-FV/(1tr)An PV-28500/(1.09A3) PV-28500/1.295029 FV Future value PV Present value r rate of return per period n number of period 22,007.23 Alternative B: PV-FV/(1+r)An PV-54000/(1.0949) PV-54000/2.171893 24,863.10 Alternative C: PV-FV/(1tr)An PV-160000/(1.09 20) PV-160000/5.604411 28,548.94 Part b: 0 Part c: Alternative B & Cas it is worth more than $23000 il . Sheet1 167 .. Sheetl 168 Sheet1 169 . Sheet1 170 .Sheet1 171 Sheet1 172 ·Sheet1 173 . Sheet1174 ENG 12:17 US 26/01/2019

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