You have some property for sale and have received two offers. The first offer is for $189,000 today in cash. The second offer is the payment of $100,000 today and an additional $100,000 two years from today. If the applicable discount rate is 8.75%, which offer should you accept and why? Select one: O a. You should accept the $189.000 today because it has the lower future value. ob. You should accept the $189,000 today because it has the higher present value. c. You should accept the second offer because it has a present value of $194,555.42. O d. You should accept the second offer because you will receive an extra $11,000. O e. You should accept the second offer because you will receive $200000 total.
You have some property for sale and have received two offers. The first offer is for $189,000 today in cash. The second offer is the payment of $100,000 today and an additional $100,000 two years from today. If the applicable discount rate is 8.75%, which offer should you accept and why? Select one: O a. You should accept the $189.000 today because it has the lower future value. ob. You should accept the $189,000 today because it has the higher present value. c. You should accept the second offer because it has a present value of $194,555.42. O d. You should accept the second offer because you will receive an extra $11,000. O e. You should accept the second offer because you will receive $200000 total.
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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please explain why the option is correct and remaining incorrect please answer in detail describe each and every option with full explantion , computation , formulation thanks
Transcribed Image Text:You have some property for sale and have received two offers. The first offer is for $189,000 today in cash. The
second offer is the payment of $100,000 today and an additional $100,000 two years from today. If the
applicable discount rate is 8.75%, which offer should you accept and why?
Select one:
O a. You should accept the $189.000 today because it has the
lower future value.
ob. You should accept the $189,000 today because it has the higher present value.
o c. You should accept the second offer because it has a present value of $194,555.42.
O d. You should accept the second offer because you will receive
an extra $11,000.
O e.
You should accept the second offer because you will receive $200000 total.
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