Question
Suppose the interest rate is 3.8%. a. Having $650 today is equivalent to having what amount in one year? b. Having $650 in one year
Suppose the interest rate is 3.8%. a. Having $650 today is equivalent to having what amount in one year? b. Having $650 in one year is equivalent to having what amount today? c. Which would you prefer, $650 today or $650 in one year? Does your answer depend on when you need the money? Why or why not?
a. Having $650 today is equivalent to having what amount in one year? It is equivalent to $
b. Having $650 in one year is equivalent to having what amount today? It is equivalent to $
c. Which would you prefer, $650 today or $650 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, $650 today is preferred to $650 in one year. This answer is correct even if you don't need the money today, because by investing the $650 you receive today at the current interest rate, you will have more than $650 in one year." Is the above statement true or false?
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