Your father offers you a choice of $100,000 in 13 years or $45,000 today. If the
ID: 2532564 • Letter: Y
Question
Your father offers you a choice of $100,000 in 13 years or $45,000 today. If the interest rate is 9 percent, how much is the $100,000 worth now? (Enter your answer as a positive number rounded to 2 decimal places.)
a-2. Which offer should you choose?
$100,000 in 13 years
$45,000 today
b-1. Now assume the offer is $100,000 in 10 years or $45,000 today. How much is the $100,000 at 9 percent for 10 years worth now? (Enter your answer as a positive number rounded to 2 decimal places.)
b-2. Now, which offer should you choose?
$100,000 in 10 years
$45,000 today
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount a-1 Amount to be received after 13 Years 100,000.00 Present Value factor at 9% for 13 Years 0.3262 _PV of 100,000 32,617.86 a-2 $45,000 today b-1 Amount to be received after 10 Years 100,000.00 Present Value factor at 9% for 10 Years 0.4224 _PV of 100,000 42,241.08 b-2 $45,000 today Time PVF at 9% 1.00 0.9174 2.00 0.8417 3.00 0.7722 4.00 0.7084 5.00 0.6499 6.00 0.5963 7.00 0.5470 8.00 0.5019 9.00 0.4604 10.00 0.4224 11.00 0.3875 12.00 0.3555 13.00 0.3262