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(2) Your wealthy Aunt offers you a graduation gift. She will give you a $10,000 lump...

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Finance

(2) Your wealthy Aunt offers you a graduation gift. She willgive you a $10,000 lump sum payment or 1,100/year for the next 10years. This is essentially a risk free gift from your standpoint.The risk free rate currently sites at 2.5%. Which will you take?Why? Please use the financial principles from the chapter to makethis decision. show your work.

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Lumpsum amount received today 10000Annual payment for next 10 years 1100 per year Risk freerate 25As the lumpsum payment is received today and annual payments arespread over next 10 yearsHence we can only    See Answer
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(2) Your wealthy Aunt offers you a graduation gift. She willgive you a $10,000 lump sum payment or 1,100/year for the next 10years. This is essentially a risk free gift from your standpoint.The risk free rate currently sites at 2.5%. Which will you take?Why? Please use the financial principles from the chapter to makethis decision. show your work.

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