Choice 1: Payments of $ 2600 now, $ 3200 a year from now, and $ 3880 two years from now.
Choice 2: Three yearly payments of $ 3200 starting now.
Modification: Interest is compounded continuously instead of annually.
(a) If the interest rate on savings were 4.86 %, which would you prefer?
(Type in 1 for Choice 1, or 2 for Choice 2.)
(b) What is the interest rate that would make both choices equally lucrative? %
2 answers