Which of four alternatives has the highest present value

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Reference no: EM131295150

Tyson Trucking won a settlement in a lawsuit and was offered four different payment alternatives by the defendant's insurance company. The interest rate is 6%. Ignoring tax considerations, which of the following four alternatives has the highest present value? Support your answer with the appropriate calculations.

I) $150,000 now

II) $45,000 per year for the next 4 years (payment made at the end of the year)

III) $5,000 now and then $20,000 per year for the next 10 years (payment made at the end of the year)

IV) $5,000 now and then $5,000 per year for the next 10 years (payment made at the end of the year) plus a lump-sum payment of $200,000 at the end of the eleventh year

Reference no: EM131295150

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