Which o?er has the highest present value

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Reference no: EM131187941

Suppose you are selling a used car and there are two potential buyers. Buyer 1 o?ers to give you $3100 today and Buyer 2 o?ers to pay you in installments of $800 once each year for 4 years (with the rest installment paid today). Assuming you do not need the money immediately, which o?er should you accept (i.e. which o?er has the highest present value)? Assume that the accumulation factor is 1.03.

Reference no: EM131187941

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