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Discuss the second choice is that they will wait four years

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Marilyn's parents have agreed to help her purchase a new car upon graduation in four years. They have given her two choices. The first choice is that they will give her $3,910 each year for the next four years for her to invest herself. The second choice is that they will wait four years and give her $17,320. Marilyn can invest the money at a 5% rate.

a) Which option should Marilyn choose?

 

Option 1

Option 2

Present value

$13864.6665

$14249.2069

b) If Marilyn can invest the money at 7%, which options should she choose?

Reference no: EM131822963

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