Your brother has offered to give you either $65,000 today or $130,000 in 13 years. If the interest rate is 5% per year, which option is preferable? The present value of the future amount (amount received in 13 years) is $ Which option is preferable? (Select the best choice below.) (Round to the nearest dollar.) O A. Take the present amount offered because it is less than the future amount. O B. Take the future amount because it is greater than the amount offered today. OC. Take the present amount offered because it is greater than the present value of the future amount. O D. Take the future amount because it is twice as much as the amount offered today in present value terms.
Your brother has offered to give you either $65,000 today or $130,000 in 13 years. If the interest rate is 5% per year, which option is preferable? The present value of the future amount (amount received in 13 years) is $ Which option is preferable? (Select the best choice below.) (Round to the nearest dollar.) O A. Take the present amount offered because it is less than the future amount. O B. Take the future amount because it is greater than the amount offered today. OC. Take the present amount offered because it is greater than the present value of the future amount. O D. Take the future amount because it is twice as much as the amount offered today in present value terms.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Your brother has offered to give you either $65,000 today or $130,000 in 13 years. If the interest rate is 5% per year, which option is preferable?
The present value of the future amount (amount received in 13 years) is $
Which option is preferable? (Select the best choice below.)
(Round to the nearest dollar.)
A. Take the present amount offered because it is less than the future amount.
B.
Take the future amount because it is greater than the amount offered today.
C. Take the present amount offered because it is greater than the present value of the future amount.
D. Take the future amount because it is twice as much as the amount offered today in present value terms.
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