Consider the following alternatives:i. $100 received in one yearii. $230 received in 5 yearsiii. $320 received in 10 yearsa. Rank the alternatives from most valuable to least valuable if the interest rate is 10% per year.b. What is your ranking if the interest rate is only 4% per year?c. What is your ranking if the interest rate is 20% per year?...a. Rank the alternatives from most valuable to least valuable if the interest rate is 10% per year.(Select the best choice below.)A. The ranking of the projects is: option i > option iii > option ii.B. The ranking of the projects is: option iii > option ii > option i.C. The ranking of the projects is: option ii > option i> option iiiD. The ranking of the projects is: option ii > option iii > option i.b. What is your ranking if the interest rate is only 4% per year?(Select the best choice below.)A. The ranking of the projects is: option i > option ii > option ii.B. The ranking of the projects is: option iii > option ii > option i.C. The ranking of the projects is: option iii > option i> option ii.D. The ranking of the projects is: option ii > option ii > option i. Consider the following alternatives:i. $100 received in one yearii. $230 received in 5 yearsiii. $320 received in 10 yearsa. Rank the alternatives from most valuable to least valuable if the interest rate is 10% per year.b. What is your ranking if the interest rate is only 4% per year?c. What is your ranking if the interest rate is 20% per year?...b. What is your ranking if the interest rate is only 4% per year?(Select the best choice below.)A. The ranking of the projects is: option i > option ii > option ii.B. The ranking of the projects is: option iii > option ii > option i.C. The ranking of the projects is: option iii > option i> option ii.D. The ranking of the projects is: option ii > option ii > option i.c. What is your ranking if the interest rate is 20% per year?(Select the best choice below.)A. The ranking of the projects is: option ii > option i > option ii.B. The ranking of the projects is: option i > option ii > option i.C. The ranking of the projects is: option iii > option i> option i.D. The ranking of the projects is: option ii > option ii > option i.

Present Value = Future Value(1+i)n where, i= Interest rate n= period

Consider the following alternatives: i. $100 received in one year ii. $230 received in 5 years iii. $320 received in 10 years a. Rank the alternatives from most valuable to least valuable if the interest rate is 10% per year. b. What is your ranking if the interest rate is only 4% per year? c. What is your ranking if the interest rate is 20% per year?

Consider the following alternatives: i. $100 received in one year ii. $230 received in 5 years iii. $320 received in 10 years a. Rank the alternatives from most valuable to least valuable if the interest rate is 10% per year. b. What is your ranking if the interest rate is only 4% per year? c. What is your ranking if the interest rate is 20% per year?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 15PROB

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Consider the following alternatives:
i. $100 received in one year
ii. $230 received in 5 years
iii. $320 received in 10 years
a. Rank the alternatives from most valuable to least valuable if the interest rate is 10% per year.
b. What is your ranking if the interest rate is only 4% per year?
c. What is your ranking if the interest rate is 20% per year?
...
a. Rank the alternatives from most valuable to least valuable if the interest rate is 10% per year.
(Select the best choice below.)
A. The ranking of the projects is: option i > option iii > option ii.
B. The ranking of the projects is: option iii > option ii > option i.
C. The ranking of the projects is: option ii > option i> option iii
D. The ranking of the projects is: option ii > option iii > option i.
b. What is your ranking if the interest rate is only 4% per year?
(Select the best choice below.)
A. The ranking of the projects is: option i > option ii > option ii.
B. The ranking of the projects is: option iii > option ii > option i.
C. The ranking of the projects is: option iii > option i> option ii.
D. The ranking of the projects is: option ii > option ii > option i.

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