Jeff has the opportunity to receive lump-sum payments either now or in the future.Which of the following opportunities is the best,given that the interest rate is 7% per year?
A)one that pays $1,000 now
B)one that pays $1,200 in two years
C)one that pays $1,500 in five years
D)one that pays $1,800 in ten years

Question

Quizplus · Accepted Answer

The future value of $1,000 now at 7% for 5 years is $1,402.55. The future value of $1,200 in two years at 7% is $1,322.85. The future value of $1,500 in five years at 7% is $1,885.65. The future value of $1,800 in ten years at 7% is $2,732.05. Therefore, the best opportunity is the one that pays $1,500 in five years.

Jeff Has the Opportunity to Receive Lump-Sum Payments Either Now