Question

 ​(Present-value comparison)  You are offered ​$120,000 today or ​$340,000 in 12 years. Assuming that you can...

 ​(Present-value comparison)  You are offered

​$120,000

today or

​$340,000

in

12

years. Assuming that you can earn

15

percent on your​ money, which should you​ choose?

If you are offered

​$340,000

in

12

years and you can earn

15

percent on your​ money, what is the present value of

​$340,000​?

​$nothing  

​(Round to the nearest​ cent.)

0 0
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Answer #1

Present value of $340,000=340,000*Present value of discounting factor(rate%,time period)

=340,000/1.15^12

=340,000*0.18690715

=$63548.43(Approx).

Hence $120,000 today is better having higher present value.

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