5. The following two alternatives are mutually exclusive. (a) Use rate of return analysis to decide which one will you select if your MARR is 14% per year? (b) Graph interest rate vs. present value for both option 1 and 2. (c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. Alternative Life, Annual Benefit Salvage Value Initial Cost years 4. Option 1 Option 2 $42,000 $45,000 $10,000 $11,500 $4,000 $4,200 6.

Investment A has a future value of $600.  Investment B has a future value of $500. Both have the same present value.  All else equal, which one has the higher interest rate? Select one: a. B b. A c. A=B Clear my choice

You are offered the following two choices. You can either receive Option I: 3 annual payments of $100 each to be received exactly 1, 2, and 3 years from now; Or, Option II: one payment of $269 to be received exactly one year from now. The annual interest rate (as an EAR) that would make you indifferent between receiving the above two options is _______%.

Calculate the compounding factor you would use to find the future value of an amount of money you will receive 20 years in the future, assuming a 6% interest rate.   Question 14 options:   3.207   3.042   2.498   2.662