If offered the choice of receiving $500 today or $500 in five year's time, which option would you choose, and why?$500 today because time has value and by receiving the money today you can put it to use immediately.O $500 in five year's time because time has value and so the $500 will be worth more then.$500 in five year's time since waiting a year does not involve an opportunity cost.

The concept of present and future value comes from considering the change in the value of money with…

Answered: If offered the choice of receiving $500…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Answer the following questions in full sentences and clearly. Be sure to have answered with an explanation and answer each question separately. Question 1: Is long term financial planning worth the short term sacrifices? Question 2A: Would you rather receive a check for $1,000 today or $1,300 in 5 years from now? Explain. Question 2B: Which option would more likely yield you more money in five years? Question 2C: Why might it be hard for many of us to be able to think that far ahead into the future?
You estimate that you can save $3,900 by selling your home yourself rather than using a real estate agent. What would be the future value of that amount if invested for seven years at 5 percent? Use Exhibit 1-A. (Round FV factor to 3 decimal places to 2 decimal places.). Better if you use your calculator. and final answer Future value
You won a raffle while you were down the shore with friends. For your prize, you can choose among the following three alternatives. If you believe that an 8% return is the appropriate discount rate to use, what is the present value of $25,000 four years from today?
Please advise on these time value of money practice problems. How would you solve these using a financial calculator? What values would you enter for N, I/YR, PV, PMT, and FV ? a) Calculate the PV when you plan to receive $5,000 in 5 years with a 10% discount rate. b) Calculate the FV of a $10,000 deposit today for 10 years @ 5%. c) What is the PV of receiving $2,500 for each of the next 5 years with a 10% discount rate?
kal.3 your anticipated wedding is three years from today. you don't know who your spouse will be but you do know that you are saving $10000 today and $17000 one year from today for this purpose. you also plan to pay the final $12000 of anticipated costs on your wedding day,. at a diacount rate of 5.5 %, what is the current cost of your upcoming wedding!
Assume that you just inherited an annuity that will pay you $10,000 per year for 10 years, with the first payment being made today. A friend of your mother offers to give you $60,000 for the annuity. If you sell it, what rate of return would your mother’s friend earn on his investment? If you think a “fair” return would be 6%, how much should you ask for the annuity? What keys do I need to enter in a financial calculator to get the answers of (13.70%, $78,016.92)/ only show me the keys to enter in a financial calculaotr. not excel and not algebra
You just won a prize that comes with two payout choices. The first option is to get $130,000 rightnow and nothing hereafter. The second option is to get $94,000 right now and $11,000 three years fromnow (and nothing after that). If your discount rate is 6 % which should you take?
You have the option to receive $5,000 one year from now or $4,500 today. If the discount rate is 10%, which option should you choose to maximize your present value? Receive $5,000 one year from now Receive $4,500 today
Use a financial calculator or computer software program to answer the following questions: a) Melanie is trying to save money for retirement and has a future goal of $750,000 at the end of 20 years. Determine the present value of her goal using a discount rate of 12%. b) How would the present value change if the $750,000 is to be received at the end of 15 years instead? Explain the impact and show your work?
You do an experiment in which you offer participants $500 today or a different amount in the future. A participant tells you that they would be indifferent between receiving $750 4 years from now and $500 today. What is their (exponential) discount rate according to this experiment?

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