Your grandfather has offered you a choice of one of the three following alternatives:

Your grandfather has offered you a choice of one of the three following alternatives: $13,500 now; $6,500 a year for nine years; or $91,000 at the end of nine years. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.

a-1.
Assuming you could earn 9 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Present Value
$13,500 $
$6,500 $
$91,000 $

a-2. Which alternative should you choose?

$91,000 received at end of nine years
$6,500 received each year for nine years
$13,500 received now

b-1.
If you could earn 10 percent annually, compute the present value of each alternative: (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Present Value
$13,500 $
$6,500 $
$91,000 $

b-2. Which alternative should you choose?

$91,000 received at end of nine years
$6,500 received each year for nine years
$13,500 received now

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