For your 21st birthday, your grandfather offers you a gift of $1,000 today. However, you have the choice of waiting 3 years and receiving $1,500 or waiting 5 years and receiving $3,000. If your money grows at a rate of 8% compounded annually, which alternative should you choose?

For your 21st birthday, your grandfather offers you a gift of $1,000 today. However, you have the choice of waiting 3 years and receiving $1,500 or waiting 5 years and receiving $3,000. If your money grows at a rate of 8% compounded annually, which alternative should you choose?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

For your 21st birthday, your grandfather offers you a gift of $1,000 today. However, you have the choice of waiting 3 years and
receiving $1,500 or waiting 5 years and receiving $3,000. If your money grows at a rate of 8% compounded annually, which alternative
should you choose?
Choice 1: P = $
Choice 2: P = $
Choice 3: P = $
Round entry to the nearest dollar. Tolerance is ±4.

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