70.2K

Verified Solution

Link Copied!

Suppose the interest rate is 4.2%. a. Having $500 today is equivalent to having what amount in one year? b. Having $500 in one year is equivalent to having what amount today? c. Which would you prefer, $500 today or $500 in one year? Does your answer depend on when you need the money? Why or why not? a. Having $500 today is equivalent to having what amount in one year? It is equivalent to S(Round to the nearest cent.) b. Having $500 in one year is equivalent to having what amount today? It is equivalent to S(Round to the nearest cent c. Which would you prefer, $500 today or $50k in one year? Does your answer depend on when you need the money? Why or why not? "Because money today is worth more than money in the future, $500 today is preferred to $500 in one year. This answer is correct even if you don't need the money today, because by investing the $500 you receive today at the current interest rate, you will have more than $500 in one year Enter your answer in each of the answer boxes. Next Previous 7 8 9 ot today It is equivalent to S. (Round to the nearest cent.) c. Which would you prefer, $500 today or $500 in one year? Does your answer de "Because money today is worth more than money in the future, $500 today is prefe by investing the $500 you receive today at the current interest rate, you will have m Is the above statement true or false? Enter your answer in each of the answer boxes. Previous

Answer & Explanation Solved by verified expert

See Answer