Your father offers you a choice of $105,000 in 12 years or $47,000 today. b. If money is still discounted at 8 percent, but your choice is between $105,000 in 9 years or $47,000 today, which should you choose?
The choice of $105,000 in 9 years should be preferred over$47,000 today
Future value (FV) = $105,000
Interest Rate (i) = 8%
Period (n) = 9 year
The present value of $105,000 in 9 years is $52,526.14 which is more than $47,000 today. Thus, the option of $105,000 in 9 years should be chosen.
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