You have a contract with someone who has agreed to pay you $20,000 in four years.She offers to pay you now instead.For which of the following interest rates and payments would you take the money today?.
A)8%, $15,000
B)7%, $16,000
C)6%, $17,000
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The present value of $20,000 in four years at 8% is $15,000. The present value of $20,000 in four years at 7% is $16,000. The present value of $20,000 in four years at 6% is $17,000. Therefore, you would take the money today for any of the given interest rates and payments.

You Have a Contract with Someone Who Has Agreed to Pay