Alison Has $5000 to Invest and Is Trying to Decide

Multiple Choice

Alison has $5000 to invest and is trying to decide between two investment opportunities. One investment offers her future cash flows of $2000 for each of the next five years. Another investment offers her future cash flows of $5000 in year five and $7500 in year six. In order for her to compare the future cash flows of these two investments, what will she need to calculate?

A) annuity value
B) average annual payout
C) common payout value
D) present value