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(Related to Checkpoint 5.4 ) (Comparing present and future values) You are offered today or in 14 years. Assuming that you can earn 15 percent on your money, which should
you choose?
If you are offered in 14 years and you can earn 15 percent on your money, what is the present value of ? of 20 points
(Round to the nearest cent.)

Ask by Vargas Johnson. in the United States
Jan 01,2025

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Answer

The present value of $360,000 in 14 years at a 15% interest rate is $50,869.00.

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Extra Insights

To find the present value (PV) of in 14 years at an interest rate of 15%, you can use the present value formula:
where:
  • = future value ($360,000)
  • = interest rate (15% or 0.15)
  • = number of years (14)
Now, plugging in the values:
So, the present value of in 14 years is approximately .
Now, to determine which option is better, you have today and a present value of for the future amount. Since is greater than , you should choose today.

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