Your father offers you a choice of $135,000 in 10 years or $50,000 today. Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods.

a-1. If money is discounted at 9 percent, what is the present value of the $135,000? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Present value

a-2. Which offer should you choose?

• $50,000 today

• $135,000 in 10 years

b-1. Now assume the offer is $135,000 in 7 years or $50,000 today. What is the present value of the $135,000 at 9 percent for 7 years? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Present value

b-2. Now, which offer should you choose?

• $135,000 in 7 years

• $50,000 today