Assuming an after-tax rate of return of 10%,John should prefer to pay an expense of $85 today instead of an expense of $100 in one year.Use Exhibit 3.1 in the text.

Question

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Based on the exhibit, the present value of $100 one year from now with a 10% after-tax return is $90.91, whereas the expense of $85 today has a present value of $85. Therefore, John should prefer to pay the expense of $85 today.

Assuming an After-Tax Rate of Return of 10%,John Should Prefer