Question 8

Your brother has offered to give you either $60:000 today or $120,000 in 14 years. If the interest rate is 5% per year which option is preferable? The present value of the future amount (amount received in 14 years) is $ (Round to the nearest dollar.) Which option is preferable? (Select the best choice below.) Take the future amount because it is twice as much as the amount offered today in present value terms. Take the present amount offered because it is less than the future amount. Take the present amount offered because it is greater than the present value of the future amount. Take the future amount because it is greater than the amount offered today