Suppose the interest rate is

3.6%.

a. Having

$500

today is equivalent to having what amount in one year?

b. Having

$500

in one year is equivalent to having what amount today?

c. Which would you prefer,

$500

today or

$500

in one year? Does your answer depend on when you need the money? Why or why not?

Question content area bottom

Part 1

a. Having

$500

today is equivalent to having what amount in one year?

It is equivalent to

$enter your response here.

(Round to the nearest cent.)

Part 2

b. Having

$500

in one year is equivalent to having what amount today?

It is equivalent to

$enter your response here.

(Round to the nearest cent.)

Part 3

c. Which would you prefer,

$500

today or

$500

in one year? Does your answer depend on when you need the money? Why or why not?

"Because money today is worth more than money in the future,

$500

today is preferred to

$500

in one year. This answer is correct even if you don't need the money today, because by investing the

$500

you receive today at the current interest rate, you will have more than

$500

in one year."

Is the above statement true or false?