Investment Options Assignment | Homework For You
May 22nd, 2020
You and your sister and are comparing two investment options that each pay 6 percent interest, compounded annually. Both options will provide you with $12,000 of income. Option A pays $2,000 the first year followed by two annual payments of $5,000 each. Option B pays three annual payments $4,000 each. Which one of the following statements is correct given these two investment options? Assume a positive discount rate.

Multiple Choice
Both options are of equal value since they both provide $12,000 of income.
C) Option B is a perpetuity.
C) Option has a higher present value at Time
O. Option A is an annuity Option A has the higher future value at the end of Year 3. Get Finance homework help today
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