1. The problem statement, all variables and given/known data Your favorite Aunt, Harriet of Harriet’s Psychic Services has suddenly died and in reading her will for the disposition of her assets you discover that she has left you a choice as to which of her assets you can receive. You can choose her stock portfolio which will pay you a cumulative dividend of $10,000/yr. Payable quarterly but which is also scheduled for liquidation at the end of the 4th Year for a prearranged amount of $100,000, Or, you can receive the proceeds of her business which are $6000 every 6 months and which will continue for 5 years at which time the sole employee will exercise her right to purchase the business for $85,000. Which would you choose given that they have the same risk of default and that comparable investments currently return 8%? 2. Relevant equations FV=PV(1+r)^n FV= Future value PV= Present value r= rate n= number of times compounded in a year. 3. The attempt at a solution I don't know exactly what I'm supposed to do actually. Apparently, we learned this formula in class, and we were supposed to discuss 6 problems today. No one did the 6th problem because it was very different. I assume the first part is compounded quarterly because it's dispersed quarterly, with 8% return as it says as the end.... Correct me if I'm wrong. Starts at 0, add 2500 and goes 2550 because interest. 5050 because of payment, 5151 because interest. 7651 payment, 7804.02 interest. 10,304.02 payment, 10510.1 interest... etc. etc. until.. $ 47,530.18 +100k from liquidation.... I don't know if I did that right or not. I just plugged in 2500 then did interest, add in 2500 then interest, etc.