You have recently received a legal settlement that offers two payout options. You can choose to receive $50,000 immediately, or $80,000 eight years from now. Which option would be more valuable if the annual interest rate is 5%?

Question

Answer

None of the answer options is correct

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I would choose to receive $80,000 in 8 years because it is worth more than $50,000 today.

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It does not matter whether I choose $50,000 today or $80,000 in 8 years since both have the same present value

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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 $50,000 now because it has a higher value than receiving $80,000 in 8 years.

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

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