Andy is offered the following two income scenarios: (1) earn $10,000 the first year, $12,000 the second year, and $15,000 the third year or (2) earn $15,000 the first year, $12,000 the second year, and $10,000 the third year. Which is the rational option?

Question

Quizplus · Accepted Answer

Option 2 is the rational choice because it provides a higher present value of income due to receiving more money earlier, which can be invested or used sooner.

Andy Is Offered the Following Two Income Scenarios: (1) Earn