-Mitch has been offered three different contracts for a service he provides. Contract 1: $9,000 received at the beginning of each year for ten years, compounded at a 6 percent annual rate.
Contract 2: $9,000 received today and $20,000 received ten years from today. The relevant interest rate is 12 percent.
Contract 3: $9,000 received at the end of Years 4, 5, and 6. The relevant annual interest rate is 10 percent.
What is the present value of Contract 3?
A) $18,497.15
B) $16,815.56
C) $24,619.68
D) $22,381.52

Question

-Mitch has been offered three different contracts for a service he provides. Contract 1: $9,000 received at the beginning of each year for ten years, compounded at a 6 percent annual rate.
Contract 2: $9,000 received today and $20,000 received ten years from today. The relevant interest rate is 12 percent.
Contract 3: $9,000 received at the end of Years 4, 5, and 6. The relevant annual interest rate is 10 percent.
What is the present value of Contract 3?
A) $18,497.15 
B) $16,815.56 
C) $24,619.68 
D) $22,381.52

Quizplus · Accepted Answer

Contract 3 11eb49ea_7407_433a_ae87_8d51b1ade32a_TB5406_00

-Mitch Has Been Offered Three Different Contracts for a Service