What would you rather have? A $1,000,000 today or $20,000 every year for the next 50...
What would you rather have? A $1,000,000 today or $20,000 every year for the next 50 years? This is the way the question is posed. No interest rate or any other variables are included. Thank you.
Homework Answers
$20,000*50 = 1,000,000, which means both the amounts are the same in absolute value
Regardless of the amount of interest, the concept of time value of money tells us that an amount of money today is worth more than the same amount of money at a future date. Hence, the lump sum of $1,000,000 will be the better option to choose.
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