Compare the economic values of two options given an annual rate of 8.5%. Option 1 - $900 in 60 days and $1,200 in 180 days. Option 2 - $925 in 90 days and $1,050 in 120 days. Given the following information, choose the best option.
A) Option 1 - benefit of $111.85
B) Option 1 - benefit of $138.45
C) No difference between options
D) Option 2 - benefit of $111.85
E) Option 2 - benefit of $138.45

Question

Quizplus · Accepted Answer

The present value of Option 1 is higher than Option 2 when discounted at an annual rate of 8.5%, resulting in a benefit of $111.85 for Option 1.

Compare the Economic Values of Two Options Given an Annual