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1. You are offered Birr 1,000 today, Birr 10,000 in 12 years, or Birr 25,000 in 25 years. Assuming that you can earn 11 percent on your money, which offer should you choose?

Sagot :

Parrainidn

Based on the options given of different cashflows, the offer you should accept is Birr 10,000 in 12 year.

Which offer should you accept?

Find the present values of each offer:

Offer 1:

= Birr 1,000

Offer 2:

= 10,000 / 1.11¹²

= Birr 2,858.41

Offer 3:

= 25,000 / 1.11²⁵

= Birr 1,840.20

The offer with the highest present value is the second offer of Birr 10,000 in 12 years.

Find out more on present value at https://brainly.com/question/20813161.

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