An investor has the opportunity to invest at 20 per cent per year.Would they prefer to have $20,000 in a year's time or have any of the following sums now?

Question

Quizplus · Accepted Answer

To determine which option is best, we need to calculate how much each option would be worth in a year's time if invested with a 20% annual return.

A) $15,000 in a year's time with a 20% return would be worth: $15,000 x 1.20 = $18,000
B) $16,000 in a year's time with a 20% return would be worth: $16,000 x 1.20 = $19,200
C) $15,667 in a year's time with a 20% return would be worth: $15,667 x 1.20 = $18,800
D) $16,800 in a year's time with a 20% return would be worth: $16,800 x 1.20 = $20,160

Therefore, option D ($16,800 now) would be the best choice as it would yield the highest return in a year's time.

An Investor Has the Opportunity to Invest at 20 Per