Time Value of Money-Present Value of two alternatives
Suppose you have the option to receive $1000 every year starting next year, lasting for 20 years or to receive $2000 every year starting next year for the next 5 years with an interest rate of 5 % wich one is better. (show calculations as a fixed payment loan).
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Solution Preview
To compare the two we will have to calculate the present value of the two cash flow
Cash flow 1: $1000 every year for the next 20 years
Cash flow 2: $2000 every year for the next 5 years
Cash flow 1: $1000 every year for the next 20 years
Payment A Annual
No of ...
Solution Summary
The solution calculates Present Value of two alternatives.
$2.19