You won a raffle while you were down the shore with friends. For your prize, you can choose among the following three alternatives. If you believe…

1. You won a raffle while you were down the shore with friends. For your prize, you can choose among the following three alternatives. If you believe that an 7.5% return is the appropriate discount rate to use, what is the present value of each alternative? Which should you prefer? a) $20,000 six years from today b) $12,000 today c) $5,000 today plus four annual payments of $2,000, the first of which would occur one year from today

2. Determine the value at the end of ten years of a $7,000 investment today that pays a nominal annual interest rate of 9%, compounded: a) Annually b) Semiannually c) Quarterly d) Monthly