Your uncle offers you a choice of $106,000 in 10 years or $43,000 today. Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods. a-1. If money is discounted at 9 percent, what is the present value of the $106,000? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value a-2. Which offer should you choose? O $106,000 after 10 years O $43,000 today
Your uncle offers you a choice of $106,000 in 10 years or $43,000 today. Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods. a-1. If money is discounted at 9 percent, what is the present value of the $106,000? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value a-2. Which offer should you choose? O $106,000 after 10 years O $43,000 today
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 uncle offers you a choice of $106,000 in 10 years or $43,000 today. Use Appendix B as an approximate answer, but calculate
your final answer using the formula and financial calculator methods.
a-1. If money is discounted at 9 percent, what is the present value of the $106,000? (Do not round intermediate calculations. Round
your final answer to 2 decimal places.)
Present value
a-2. Which offer should you choose?
$106,000 after 10 years
O $43,000 today
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The concept of TVM states that the money earned earlier is worth more because the money earns interest over time. It is used in gauging the value of the holdings by investors.
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