You are comparing two investment options. Option A pays five annual payments starting with $5,000...
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Finance
You are comparing two investment options. Option A pays five annual payments starting with $5,000 the first year followed by four annual payments of $2,500 each. Option B pays five annual payments of $3,000. Which one of the following statements is correct given these two investment options?
A.
Option B has a higher present value than Option A given a positive rate of return.
B.
Option B has a lower present value than Option A given a zero rate of return.
C.
Both options are of equal value today regardless of the rate of return.
D.
Both options are of equal value today given a zero rate of return.
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