Marty has been offered an injury settlement of $10,000 payable in three years. He wants to know

Question:

Marty has been offered an injury settlement of $10,000 payable in three years. He wants to know what the present value of the injury settlement is if his opportunity cost is 5%. (The opportunity cost is the interest rate in this problem.) What if the opportunity cost is 8%? What if it is 12%?

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...