1. Frank Rizzo is considering two investment options with seven-year lives. Option one pays $250 every quarter,...

1. Frank Rizzo is considering two investment options with seven-year lives. Option one pays $250 every quarter, the other pays $500 semi-annually. The option with the better value would be:
A. $250 every quarter.
B. Both options are equally attractive.
C. $500 semi-annually.

2. Darius Rucker is leaving Theta Tech after several years. During his time at Theta he accumulated a deferred payroll benefit. He must choose between a lump-sum distribution or annual payments over the next 10 years, with his first payment deposited today. He believes he can invest any sum received at 5.15% for the next ten years. The annual payments are $12,500 and the lump-sum distribution is $105,000. To the nearest dollar, the more valuable choice is:
A. The annual payments.
B. The lump-sum distribution.
C. Both choices have the same value.

Expert Solution

jeff jeffy answered 2 years ago

Frank Rizzo is considering two investment options with seven-year lives. Option one pays $250 every quarter, the...

Frank Rizzo is considering two investment options with seven-year lives. Option one pays $250 every quarter, the other pays $500 semi-annually. The option with the better value would be: A. $250 every quarter. B. Both options are equally attractive. C. $500 semi-annually.

Frank Rizzo is considering two investment options with seven-year lives. Option one pays $250 every quarter,...

Frank Rizzo is considering two investment options with seven-year lives. Option one pays $250 every quarter, the other pays $500 semi-annually. The option with the better value would be: A) Both options are equally attractive B) $250 every quarter C) $500 semi-annually

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