Question
Your father offers you a choice of $100,000 in 10 years or $46,500 today. Calculate your final answer using the formula and financial calculator methods.
Your father offers you a choice of $100,000 in 10 years or $46,500 today. Calculate your final answer using the formula and financial calculator methods.
a-1.If money is discounted at 8 percent, what is the present value of the $100,000?(Do not round intermediate calculations. Round your final answer to 2 decimal places.)
a-2.Which offer should you choose? Why?
b-1.Now assume the offer is $100,000 in 7 years or $46,500 today. What is the present value of the $100,000 at 8 percent for 7 years?(Do not round intermediate calculations. Round your final answer to 2 decimal places.)
b-2.Now, which offer should you choose? Why?
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