1)
Alternative 1 | 2 | 3 | |
Immediate Cash | 70000 | 24000 | 0 |
Present value of annuity | 0 |
PVA7%,6*annuity 4.76654* 8100 38608.97 |
PVA7%,6*Annuity 4.76654*14500 69114.83 |
Total worth of prize | 70000 | 62608.97 | 69114.83 |
Since the worth of Alternative I is highest amounting to $ 70000 ,Alternative 1 should be selected.
2)
Table or calculator function | |
Payment | 130000 |
n | 10 |
i | 8% |
Future value | 1,883,253 |
**FVA 8%,10 *annual deposit
14.48656*130000
1883252.8
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