You have received a letter from a friend, who offers you the following choice. Either he can give you $10,000 today and leave you out of his will or include you in his will and leave you $50,000 when he dies. You ask your life insurance agent the average age of death of a heatlhy man, and learn that the friend should die at age 91.

a) If the current interest rate is 2% what will you choose to do?

b) At what interest rate would you be indifferent between the two choices?