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Which alternative do you prefer: $4,500 cash or $1,200 each year for a period of 4...

Which alternative do you prefer: $4,500 cash or $1,200 each year for a period of 4 years? Assume a discount rate of 10% annually.
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Answer #1

CALCULATION OF PRESENT VALUE OF 1200 PA FOR 4 YEARS

PRESENT VALUE=1200PVAF(10%,4)

=1200X3.1699

=3803.85

CASH =4500

SO WE SELECT THAT OPTION WHICH HAVE MAXIMUM CASH INFLOW SO WE WILL SELECT CASH 4500

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