Time value of money
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Get it written →Mike Szyslak comes to you for financial advice. He is considering adding video games to his tavern to attract more customers. The company that sells the video games has given Mike a choice of four different payment options. Which of the following four options would you recommend that Mike choose? Why?
Option 1: Pay $5,900 cash immediately.
Option 2: Pay $6,750 cash in one lump sum two years from now.
Option 3: Pay $800 at the end of each quarter for two years.
Option 4: Pay $1,000 immediately plus $5,250 in one lump sum two years from now.
Mike tells you he can earn 6 percent annual interest, compounded quarterly, on his money. You have no reason to question his assumption. You may use algebra, TVM tables, financial calculator, or Excel to solve these problems, and present a report to explain the concept of Time Value of Money.
Please review the textbook pages and use an excel worksheet to solve the problems. Please attach the excel worksheet when completed.
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