Jack and Jill have been together for many years. While vacationing in Niagara Falls, Ontario, Jill won
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Question:
Jack and Jill have been together for many years. While vacationing in Niagara Falls, Ontario, Jill won a prize at the Casino and was presented with the following options:
i) Receive $10,000 in 1 year
ii) Receive $20,000 in 5 years
iii) Receive $30,000 in 10 years
Assume Jill does not need the money today and will be able to collect it.
Questions:
a. If interest rates are 10% p.a., which option should Jill select?
b. If interest rates are 20% p.a., which option should Jill select?
c. Assume Jill is offered another option; $15,000 today, or $1,000 per year for the next 30 years. If interest rates are 6% p.a., which option should Jill select?
Related Book For
Calculus Early Transcendentals
ISBN: 978-0321947345
2nd edition
Authors: William L. Briggs, Lyle Cochran, Bernard Gillett
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