Question

You have an opportunity to receive one payment. Which of the following opportunities is the best...

  1. You have an opportunity to receive one payment. Which of the following opportunities is the best given 24% APR (compounding monthly)?

    1. A) One that pays $1200 today

    2. B) One that pays $1298 in 4 months

    3. C) One that pays $1712 in 18 months

    4. D) One that pays $2446 in 3 years

how should I solve this using the hp10bii+ calculator? Please show steps, thanks!

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Homework Answers

Answer #1

let me know if you need any clarification..

we have to compute the preset value under each of scenario
Put in calculator for each scenario -
Note: Monthly interest rate =24%/12=2%
A) B) C) D)
FV 1200 1298 1712 2446
N 0 4 18 36
I 2% 2% 2% 2%
PMT 0 0 0 0
Compute PV ($1,200.00) ($1,199.15) ($1,198.67) ($1,199.09)
therefore value today= $1,200.00 $1,199.15 $1,198.67 $1,199.09
Since option A) has highest value therefore and = A) one that pays $1200 today
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