Question
Your brother has offered to give you either $25,000 today or $50,000 in 8 years. If the interest rate is 8% per year, which
Your brother has offered to give you either $25,000 today or $50,000 in 8 years. If the interest rate is 8% per year, which option is preferable? The present value of the future amount (amount received in 8 years) is $ (Round to the nearest dollar.) Which option is preferable? (Select the best choice below.) OA. Take the future amount because it is greater than the amount offered today. OB. Take the present amount offered because it is greater than the present value of the future amount OC. Take the future amount because it is twice as much as the amount offered today in present value terms. OD. Take the present amount offered because it is less than the future amount.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started