Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your brother has offered to give you either $ 4 0 , 0 0 0 today or $ 8 0 , 0 0 0 in

Your brother has offered to give you either $40,000 today or $80,000 in 11 years. If the interest rate is 6% per year, which option is preferable?
The present value of the future amount (amount received in 11 years) is $.
(Round to the nearest dollar.)
Which option is preferable? (Select the best choice below.)
A. Take the present amount offered because it is less than the future amount.
B. Take the present amount offered because it is greater than the present value
C. Take the future amount because it is greater than the amount offered today.
D. Take the future amount because it is twice as much as the amount offered today in present value terms.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Corporate Finance

Authors: Richard Brealey

10th Global Edition

0071314172, 9780071314176

More Books

Students also viewed these Finance questions

Question

Define self-esteem and explain its importance.

Answered: 1 week ago

Question

Does it avoid typos and grammatical errors?

Answered: 1 week ago