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you just received an inheritance and are trying to decide between 3 options. your required return...

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Finance

you just received an inheritance and are trying to decidebetween 3 options. your required return is 10.4%. please find thepresent value for each option. which option should you choose?

A. $7,700 per year forever
B. one payment of $32,000 today and one payment of $55,000 in 3years.
C. 102 weekly payments of $800, with the first payment to be madetoday. Assume there are 52 weeks in a year.

Answer & Explanation Solved by verified expert
4.1 Ratings (629 Votes)
Required rate of return 104 Option A 7700 per year forever This is an example of a perpetuity where Cashflow C 7700 and r 104 The formula to calculate the present value of a perpetuity is PVperpetuity Cr 77000104 7403846154 Option 2    See Answer
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