Question

h09A Chapter 9A Homework A Saved Help Save & Exit Submit Check my work Your father offers you a choice of $130,000 in 12 years or $46,000 today. a-1. If money is discounted at 9 percent, what is the present value of the $130,000? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) points Present value eBook Hint a-2. Which offer should you choose? Print $46,000 today $130,000 in 12 years References b-1. Now assume the offer is $130,000 in 9 years or $46,000 today. What is the present value of the $130,000 at 9 percent for 9 years? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value

Answer 1

a-1
	Present value	=	A*(1+i)^-n		Where,
		=	130000*(1+0.09)^-12		A	=	$ 1,30,000.00
		=	$ 46,219.51		i	=	9%
					n	=	12
a-2
	$ 130,000 in 12 years
	Because it has higher present value.
b-1
	Present value	=	A*(1+i)^-n		Where,
		=	130000*(1+0.09)^-9		A	=	$ 1,30,000.00
		=	$ 59,855.61		i	=	9%
					n	=	9
b-2
	$ 130,000 in 12 years
	Because it has higher present value.