2. Which amount is worth more today at 14% interest rate: $1,300 in hand today or...

Question

Question

2. Which amount is worth more today at 14% interest rate: $1,300 in hand today or $2,500 due in five years?

Answer 1

Answer #1

Present value of $2500=$2500*Present value of discounting factor(rate%,time period)

=$2500/1.14^5

=$1298.42(Approx).

Hence $1300 in hand today has more worth having higher present value.

Answer 2

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