An Owner of a Small Company Is Deciding to Sell

Multiple Choice

An owner of a small company is deciding to sell her business. She received several options specified bellow. Which one should the company's owner accept?

A) $600 000 in cash
B) $500 000 in government bonds earning a 5% rate of return over 10 years
C) $400 000 in securities earning an 8% rate of return over 8 years
D) 15% of the future profits earned by the next owner during first 10 years
E) It is impossible to compare these offers due to uncertainty about basic economic variables over time.