Problem $7-15$

You are offered $$1,000$ after four years $($Offer $1)$ or $$200$ a year for four years $($Offer $2).$ If you can earn $5$ percent on your funds, calculate the future values of both payments. Use Appendix $C$ to answer the question. Round your answers to the nearest dollar.

FV$($offer $1)$: $

FV$($offer $2)$: $

Which offer will you accept?

If you can earn $16$ percent on your funds, calculate the future values of both payments. Use Appendix C to answer the question. Round your answers to the nearest dollar.

FV $($Offer $1)$: $

FV$($offer $2)$: $

Which offer will you accept, if you can earn $16$ percent on your funds?

Why are your answers different?

The choices are different as the higher interest rate