Suppose a wealthy university booster has pledged a superstar high-school sophomore soccer recruit $1,000 as a...

 

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Suppose a wealthy university booster has pledged a superstar high-school sophomore soccer recruit $1,000 as a gift the day they give a verbal commitment to play soccer at the booster's alma mater. Assuming a constant interest rate of 7%, consider the present and future values of this gift, depending on when the recruit announces their commitment. Complete the first row of the following table by determining the value of the gift in one and two years with interest if you become engaged today and save the money. Date Received Today In 1 year In 2 years Present Value (Dollars) 1,000.00 Value in One Year (Dollars) 1,000.00 Value in Two Years (Dollars) 1,000.00 Now complete the first column of the previous table by computing the present value of the gift if the recruit commits in one year or two years. The present value of the gift is if the recruit commits in one year than it is if you get engaged in two years. Suppose a wealthy university booster has pledged a superstar high-school sophomore soccer recruit $1,000 as a gift the day they give a verbal commitment to play soccer at the booster's alma mater. Assuming a constant interest rate of 7%, consider the present and future values of this gift, depending on when the recruit announces their commitment. Complete the first row of the following table by determining the value of the gift in one and two years with interest if you become engaged today and save the money. Date Received Today In 1 year In 2 years Present Value (Dollars) 1,000.00 Value in One Year (Dollars) 1,000.00 Value in Two Years (Dollars) 1,000.00 Now complete the first column of the previous table by computing the present value of the gift if the recruit commits in one year or two years. The present value of the gift is if the recruit commits in one year than it is if you get engaged in two years.

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