Suppose you have the alternative of receiving either $5,000 at the end of five years or P
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Suppose you have the alternative of receiving either $5,000 at the end of five years or P dollars today. Currently, you have no need for the money, so you could deposit the P dollars into a bank account that pays 7% interest compounded annually. What value of P would make you indifferent in your choice between P dollars today and the promise of $5,000 at the end of five years?
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