You have been offered an opportunity to receive $ 1,500 at the end of two years. You

Question:

You have been offered an opportunity to receive $ 1,500 at the end of two years. You can earn an 8% rate of return on your next- best alternative investment. How much are you willing to invest/ deposit today (t = 0) to have the opportunity to receive $ 1,500 at the end of two years, given that your interest rate is 8%? Draw a timeline to illustrate the problem. Interest is compounded annually.