Marilyn's parents have agreed to help her purchase a new car upon graduation in four years.They have given her two choices.The first choice is that they will give her $4,000 each year for the next four years for her to invest herself.The second choice is that they will wait four years and give her $18,000.Marilyn can invest the money at a 4% rate.
Required:
a.Which option should Marilyn choose? Why?
b.If Marilyn can invest the money at 8%, which options should she choose? Why?

Question

Quizplus · Accepted Answer

The Answer of Marilyn's parents have agreed to help her purchase a new car upon graduation in four years.They have given her two choices.The first choice is that they will give her $4,000 each year for the next four years for her to invest herself.The second choice is that they will wait four years and give her $18,000.Marilyn can invest the money at a 4% rate.
Required:
a.Which option should Marilyn choose? Why?
b.If Marilyn can invest the money at 8%, which options should she choose? Why?

Marilyn's Parents Have Agreed to Help Her Purchase a New