Answer:
1.the present value for the following assuming that the money can be invested at 11% is $1,209,346.73
2.if she can invest money at 11%, I will recommend that she accept the first option of taking a lump sum of $150000
Explanation:
a) using the compound interest formula
A= p[1+r%]^n
P= $150000 n=20 r=11%
A= 150000[ 1+11/100]^20
A=150000[1.11]^20
A=150000 ×8.062311536
A= $1,209,346.73
2. The first option will give her $1,209,346.73 and the second option will give her ($14,000 ×20)+$60,000= $340000
Therefore the first option is better to accept because she will make more money in the first option than in the second option.
According to given equation, the present value of investment is $1,209,346.73 and the first option needs to be acceptable.
Present value is defined as the current value of cash flows that is given in a specified rate of return.
Solution:-
A). Using the compound interest formula:-
A= p[1+r%]^n
P= $150000 n=20 r=11%
A= 150000[ 1+11/100]^20
A=150000[1.11]^20
A=150000 ×8.062311536
A= $1,209,346.73
B). The first option will give her $1,209,346.73 and the second option will give her ($14,000 ×20)+$60,000= $340000
Therefore, the first option is better to accept because she will make more money in the first option than in the second option.
Learn more about present value, refer to the link:
https://brainly.com/question/17168211
