You have recently received a legal settlement that offers two payout options. You can choose to receive $45,0000 immediately, or $70,000 seven years from now. Which option would be more valuable if the annual interest rate is 4%?

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Answer

None of the answer options is correct

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It does not matter whether I choose $45,000 today or $70,000 in 7 years since both have the same present value

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I would choose to receive $70,000 in 7 years because it is worth more than $45,000 today.

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I am indifferent between the two options because they have the same value.

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I would choose the $45,000 now because it has a higher value than receiving $70,000 in 7 years.

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You have recently received a legal settlement that offers two payout options. Yo...

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