Comparison of alternatives

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Comparison of Alternatives

Darlene Page's grandparents want to give her some money when she graduates from high school. They have offered Darlene the following three choices:

a. Receive $16,000 immediately. Assume that interest is compounded annually.

b. Receive $2,400 at the end of each six months for four years. Darlene will receive the first check in six months.

c. Receive $4,640 at the end of each year for four years. Assume that interest is compounded annually.

Required:

Darlene wants to have money for a new car when she graduates from college in four years. Assuming an interest rate of 8%, what option should she choose to have the most money in four years?

Reference no: EM13953561

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