Sam has made you an offer. He will give you either $25,000 today or $50,000 in 12 years. If you can earn 6% per year, on all monies investment, what is the value of the future cash flow, and which option is preferable?

What is the present value of the future amount (amount received in 12 years)?

(Round to the nearest dollar.)

Which option is preferable? (Select the best choice below.)

A.

Take the future amount because its present value is greated than the present amount offered.

B.

Take the present amount offered because it is less than the future amount.

C.

Take the present amount offered because it is greater than the present value of the future amount.

D.

Take the future amount because the larger amount is always worth more no matter when you receive it.