Assuming an after-tax rate of return of 10%,John should prefer to pay $85 today instead of $100 in one year.1/(1 + .10) = .909 PV.$100 x.909 = $90.90 vs $85.00.

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This is correct. By discounting the future value of $100 at a 10% rate, we get a present value of $90.90. Since $85 is less than $90.90, John should prefer to pay $85 today instead of waiting one year to pay $100.

Assuming an After-Tax Rate of Return of 10%,John Should Prefer