Answer:
the option with the highest present value is option 3 with a present value of $63,925
Explanation:
option 1)
$64,000 now, so that is its present value
option 2)
$20,000 cash now + 6 annual payments of $8,000 (6%) interest rate = $20,000 x ($8,000 x 4.9173 (PV annuity factor, 6%, 6 periods) = $20,000 + $39,338 = $59,338
option 3)
6 annual payments of $13,000 (6%) interest rate = $13,000 x 4.9173 (PV annuity factor, 6%, 6 periods = $63,925
