You are looking to invest your savings and want to earn a 10% annualized return. You can choose from the following three options: Project A: You will receive $100 at the end of two years. Project B: You will receive $50 at the end of one year and another $50 at the end of two years. Project C: You will receive $80 at the end of one year and another $20 at the end of two years. Calculate the present value of each option, which option should you pick?
You are looking to invest your savings and want to earn a 10% annualized return. You can choose from the following three options:
Project A: You will receive $100 at the end of two years.
Project B: You will receive $50 at the end of one year and another $50 at the end of two years.
Project C: You will receive $80 at the end of one year and another $20 at the end of two years.
Calculate the
The idea of present value, in finance, is to determine the worth of future cash flows or a series of cash flows in today's currency. This method takes into account the time value of money, recognizing that money received in the future is not as valuable as money received presently, considering factors such as inflation and opportunity cost. The present value is usually calculated by applying a suitable discount rate to future cash flows.
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