If you were able to earn 10% p.a.interest on money invested in a bank,how much money would you be willing to receive in 12 months' time,rather than $1000 now,so that you are indifferent between the two options?
A)$1500
B)$909
C)$900
D)$1100

Question

Quizplus · Accepted Answer

To be indifferent between receiving money now or in 12 months, the future amount should equal the present amount plus the interest earned over the year. At 10% p.a., $1000 would grow to $1000 * (1 + 0.10) = $1100 in 12 months.

If You Were Able to Earn 10% P