You expect a payment of $5,000 in two years from project you completed last summer, and you already have the post-dated check. Unfortunately, you need the money right now so you visit your local loan, who is happy to cash-advance your check for the friendly discount rate of either 20% with annual compounding or 19% with continuous compounding.

1. How much would you get with the first option?

2. How much would you get with the second option?

3. Which option should you choose?

Answer rating: 100% (QA)

To calculate how much you would receive in each of the two options well use the formula for calculat... View the full answer