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Sagot :
Based on the amounts that you are offered and their present values, the offer you should pick is Birr 10,000 in 12 years.
Which offer should you pick?
You should pick the offer with the highest present value.
Offer 1 present value:
= Birr 1,000
Offer 2 present value:
= 10,000 / (1 + 11%)²
= Birr 2,858
Offer 3 present value:
= 25,000 / (1 + 11%)³
= Birr 1,840
In conclusion, option 2 has the highest present value and so should be picked.
Find out more on present value calculations at https://brainly.com/question/27821989.
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