Ead tion Help (Related to Checkpoint 5.4) (Present-value comparison) You are off

Question

Ead tion Help (Related to Checkpoint 5.4) (Present-value comparison) You are offered $100,000 today or $340,000 in 15 years. Assuming that you can earn 13 percent on your money, which should you choose? If you are offered $340,000 in 15 years and you can earn 13 percent on your money, what is the present value of $340,000? Round to the nearest cent) Which offer should you choose? (Select the best choice below.) O A. Choose $100,000 today because its present value is higher O B. Choose $340,000 in 15 years because its present value is higher

Explanation / Answer

Present value = 340000/(1.13)^15

= 54362.86

I will select option A. Because its present value is higer than other option.

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