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Assuming a discount rate of 6 percent, which of the following has the highest cash value...

Assuming a discount rate of 6 percent, which of the following has the highest cash value (present value at the date of purchase)? Assume all purchase options below are as at the same date. There will be a single cash flow for all of the alternatives (balloon payments at the end of the financing period).

a.

$60,000 today
b.

$120,000 in 8 years
c.

$90,000 in 3 years
d.

$100,000 in 5 years
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Answer #1


OPTION (c) $90,000 in three years will have high cash value today.

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