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4.0 If you are offered four payment term options as follows; Option 1: Receive $ 60,000 now Option 2: Receive $1,300 per month for 5 years Option 3: Receive $9,000 now and another $65,000 in three years Option 4: Receive $18,000 a year in Year I to 2, $13,000 a year, in Year 3 to 5, with all cash flows to be received at the end of the year. Assuming the interest rate is 10%, which option do you prefer? (15%)

4.0 If you are offered four payment term options as follows; Option 1: Receive $ 60,000 now Option 2: Receive $1,300 per month for 5 years Option 3: Receive $9,000 now and another $65,000 in three years Option 4: Receive $18,000 a year in Year I to 2, $13,000 a year, in Year 3 to 5, with all cash flows to be received at the end of the year. Assuming the interest rate is 10%, which option do you prefer? (15%)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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4.0 If you are offered four payment term options as follows; Option 1: Receive $ 60,000 now Option 2: Receive $1,300 per month for 5 years Option 3: Receive $9,000 now and another $65,000 in three years Option 4: Receive $18,000 a year in Year I to 2, $13,000 a year, in Year 3 to 5, with all cash flows to be received at the end of the year. Assuming the interest rate is 10%, which option do you prefer? (15%)
Transcribed Image Text:4.0 If you are offered four payment term options as follows; Option 1: Receive $ 60,000 now Option 2: Receive $1,300 per month for 5 years Option 3: Receive $9,000 now and another $65,000 in three years Option 4: Receive $18,000 a year in Year I to 2, $13,000 a year, in Year 3 to 5, with all cash flows to be received at the end of the year. Assuming the interest rate is 10%, which option do you prefer? (15%)
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