You have a contract with someone who has agreed to pay you $20,000 in four years.She offers to pay you now instead.For which of the following interest rates and payments would you take the money today?.
A)8 percent,$15,000
B)7 percent,$16,000
C)6 percent,$17,000
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The present value of $20,000 in four years at 8 percent is $15,000. The present value of $20,000 in four years at 7 percent is $16,000. The present value of $20,000 in four years at 6 percent is $17,000. Therefore, you would take the money today for any of the interest rates and payments given.

You Have a Contract with Someone Who Has Agreed to Pay