Question

You have the choice of receiving $ 60,000 now or $ 33,000 now and another $...

You have the choice of receiving $ 60,000 now or $ 33,000 now and another $ 42,000 seven years from now. In terms of​ today's dollar, which choice is better and by how​ much? Money is worth 6 % compounded annually. Which choice is​ better? A. The choice of $ 33,000 now and $ 42,000 in seven years is better. B. They are equal in value. C. The choice of $ 60,000 now is better.

The better choice is greater than the alternative choice by _$ in terms of today's dollars

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The question is solved with the concept of time value of money. The amount which will be received after seven years will be pulled back @ 6%.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You have the choice of receiving $90,000 now or $31,000 now and another $63,000 two years...
You have the choice of receiving $90,000 now or $31,000 now and another $63,000 two years from now. In terms of​ today's dollar, which choice is better and by how​ much? Money is worth 4.3 % compounded annually. Which choice is​ better? A. They are equal in value. B. The choice of 31,000 now and $63,000 in two years is better. C. The choice of $90,000 now is better. The better choice is greater than the alternative choice by ​$__...
You have the choice of receiving $ 90 comma 000$90,000 now or $37,000 now and another...
You have the choice of receiving $ 90 comma 000$90,000 now or $37,000 now and another 63,000 three years from now. In terms of​ today's dollar, which choice is better and by how​ much? Money is worth 5.2 %5.2% compounded annually. Which choice is​ better? A.The choice of $ 37 comma 000 now and $ 63 comma 000 in three years$37,000 now and $63,000 in three years is better. B.The choice of $ 90 comma 000 now$90,000 now is better....
Abbi is receiving an insurance payout and has a choice of the following when money is...
Abbi is receiving an insurance payout and has a choice of the following when money is worth 5.5% compounded annually: Option 1 $8 000 per year paid at the end of each year for 9 years Option 2 $15 000 paid now, $12 000 paid 2 years from now, and $6 000 paid 9 years from now What is the PV of Option 1? Select one: a. $55830 b. $57839 c. $58677 d. $55618
You have your choice of two investment accounts. Investment A is a 6-year annuity that features...
You have your choice of two investment accounts. Investment A is a 6-year annuity that features end-of-month $3,000 payments and has an interest rate of 8 percent compounded monthly. Investment B is an annually compounded lump-sum investment with an interest rate of 10 percent, also good for 6 years. How much money would you need to invest in B today for it to be worth as much as Investment A 6 years from now? (Do not round intermediate calculations and...
Exactly 20 years from now Mr. J. R Smith will start receiving a pension of $40,000...
Exactly 20 years from now Mr. J. R Smith will start receiving a pension of $40,000 per year. The pension payment will continue for 10 years after retirement. How much is the pension worth now if the money is worth 6 percent per year?
John is going to receive a $25,000 gift five years from now. Carol is going to...
John is going to receive a $25,000 gift five years from now. Carol is going to receive a gift of the same amount seven years from now. Both use the same discount rate of 5%. Pick the correct statement related to their gifts from below. The present values of John's and Carol's gifts are equal. In future dollars, Carol's gift is worth more than John's gift. In today's dollars, John's gift is worth more than Carol's. Twenty years from now,...
You have your choice of two investment accounts. Investment A is a 7-year annuity that features...
You have your choice of two investment accounts. Investment A is a 7-year annuity that features end-of-month $2,500 payments and has an interest rate of 8 percent compounded monthly. Investment B is an annually compounded lump-sum investment with an interest rate of 10 percent, also good for 7 years. How much money would you need to invest in B today for it to be worth as much as Investment A 7 years from now? (Do not round intermediate calculations and...
You have your choice of two investment accounts. investment a is a 15-year annuity that features...
You have your choice of two investment accounts. investment a is a 15-year annuity that features end-of-month 1175 payments and has a rate of 6.4 percent compounded monthly. investment b is a lump-sum investment with a 7 percent continuously compounded rate, also good for 15 years. how much money would you need to invest in b today for it to be worth as much as investment a 15 years from now?
You have your choice of two investment accounts. Investment A is a 13-year annuity that features...
You have your choice of two investment accounts. Investment A is a 13-year annuity that features end-of-month $1,250 payments and has an interest rate of 7.5 percent compounded monthly. Investment B is a 7 percent continuously compounded lump sum investment, also good for 13 years. How much money would you need to invest in Investment B today for it to be worth as much as Investment A 13 years from now?
HI5002 Pre-recorded Tutorial Questions for Topic 3A Question 1: You wish to have an investment that...
HI5002 Pre-recorded Tutorial Questions for Topic 3A Question 1: You wish to have an investment that will bring about $20 000 in five years, and the rate of return is 8% per annum. Required: a. In term of time value of money, what does the amount of $20,000 represent? b. How much do you need to invest now if the rate is compounded annually (to the nearest dollar)? c. If you have $20,000 now and put the sum into a...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT