A judge requires Harry to make a payment to Sally.The judge says that Harry can pay her either $10,000 today or $12,000 two years from today.Of the following interest rates,which is the highest one at which Harry would be better off paying the money today?
A)4 percent
B)6 percent
C)9 percent
D)11 percent

Question

Quizplus · Accepted Answer

The future value of $10,000 today at 9% interest compounded annually for two years is $11,881, which is less than $12,000. At 11%, the future value exceeds $12,000, making 9% the highest rate at which paying today is better.

A Judge Requires Harry to Make a Payment to Sally