You will receive a payment of $5,000 six years from now. Your friend is willing to pay you $4,500 now in exchange for your future payment. Assuming a discount rate of 4% (compounded), which is worth more today, the payment of $5,000 in six years or your friend's payment today of $4,500?

Answer rating: 100% (QA)

To determine which option is worth more today we need to calculate the present value of the f... View the full answer