Present Value calculation for all alternatives |
Alternative | Amount received | No of years | Discount rate 12% | PV if Interest rate 12% | Discount rate 1% | PV if Interest rate 1% | Discount rate 18% | PV if Interest rate 18% |
i | 100 | 1 | 0.892857 | 89.28571 | 0.990099 | 99.0099 | 0.847458 | 84.74576 |
ii | 210 | 5 | 0.567427 | 119.1596 | 0.951466 | 199.8078 | 0.437109 | 91.79294 |
iii | 310 | 10 | 0.321973 | 99.8117 | 0.905287 | 280.639 | 0.191064 | 59.22998 |
Based on above
table
Ranking if Interest rate is 12% per year - ii,iii,i
Ranking if Interest rate is 1% per year - iii,ii,i
Ranking if Interest rate is 18% per year - ii,ii,iii
PV of $100 received in one year if Interest rate is 12% is $89.29
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