You are to choose between receiving $909.00 today or $1,000.00 in 12 months time. Assuming an interest
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You are to choose between receiving $909.00 today or $1,000.00 in 12 months’ time. Assuming an interest rate of 10% and rounding off to a whole dollar, should you be indifferent between the two options? Why or why not? What does this exercise tell you about the relationship between $1 today and $1 tomorrow?
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Option 1 PV 90900 Option 2 PV of 1000 1000110 90909 Yes we should be indifferent b...View the full answer
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Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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