The receipts for ZXY are estimated to be 5000 in the first y

The receipts for ZXY are estimated to be $5,000 in the first year, $4,000 in the second, and $2,000 in the third. Using an interest rate of 6%, what is the present value of these expected receipts? The second option is to invest and receive $3,500 a year. Which choice is more profitable?

Solution

Total value of the receipts are $11000 & interest earned on them is $11660 so the first choice is more profitable