James offers you $1,000 today or $X in 7 years.If the interest rate is 4.5 percent,then you would prefer to take the $1,000 today if and only if
A)X

Question

James offers you $1,000 today or $X in 7 years.If the interest rate is 4.5 percent,then you would prefer to take the $1,000 today if and only if
A)X < 1,045.00.
B)X < 1,188.89.
C)X < 1,266.67.
D)X < 1,360.86.

Quizplus · Accepted Answer

The future value of $1,000 today at an interest rate of 4.5% compounded annually for 7 years is $1,360.86. You would prefer the $1,000 today if $X in 7 years is less than this amount.

James Offers You $1,000 Today or $X in 7 Years