21)

Your father offers you a choice of $105,000 in 10 years or $45,500 today. UseAppendix Bas an approximate answer, but calculate your final answer using the formula and financial calculator methods.

a-1.	If money is discounted at 10 percent, what is the present value of the $105,000?(Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Present value

$

a-2.	Which offer should you choose?
	$105,000 in 10 years $45,500 today

b-1.	Now assume the offer is $105,000 in 7 years or $45,500 today. What is the present value of the $105,000 at 10 percent for 7 years?(Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Present value

$

b-2.	Now, which offer should you choose?
	$45,500 today $105,000 in 7 years