Question

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Which of the following options would you choose to have if therate of discount is...

Which of the following options would you choose to have if the rate of discount is 11 percent?

A) $500 in one year

B) $850 in two years

C) $920 in six years

D) $1800 in ten years

Solutions

Expert Solution

We will find the present values of the 4 options.

A) $500/(1.10) = $454.5455

B) $850/(1.10)^2 = $702.4793

C) $920/(1.10)^6 = $519.3160

D) $1800/(1.10)^10 = $693.9779

Answer = Option B

jeff jeffy answered 2 years ago
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