3.You are given the option of receiving a lump sum of $20,000 now or an annuity of $2000 per year for 10 years. Which of the following is correct? a. You cannot choose between the two without computing present values. b.You cannot choose between the two without computing future values. c.The lump sum is preferable for any positive interest rate d.The annuity is preferable for any positive interest rate
3.You are given the option of receiving a lump sum of $20,000 now or an annuity of $2000 per year for 10 years. Which of the following is correct? a. You cannot choose between the two without computing present values. b.You cannot choose between the two without computing future values. c.The lump sum is preferable for any positive interest rate d.The annuity is preferable for any positive interest rate
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:3.You are given the option of receiving a lump sum of $20,000 now or an annuity of
$2000 per year for 10 years. Which of the following is correct?
a. You cannot choose between the two without computing present values.
b.You cannot choose between the two without computing future values.
c.The lump sum is preferable for any positive interest rate
d.The annuity is preferable for any positive interest rate.
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