If you are presented with an offer to accept payment now or a greater amount in the future,you would use (assuming you can invest the money at a known rate)
A)Present Value of $1.
B)Future Value of $1.
C)Present Value of an annuity.
D)Future Value of an annuity.

Question

Quizplus · Accepted Answer

To determine whether to accept payment now or in the future, we need to compare the present value of the future payment to the amount offered now. Therefore, we need to use the Present Value formula which is given by PV = FV / (1+r)^n, where r is the interest rate and n is the number of periods. We can use the Present Value of $1 table to find the present value factor for the given interest rate and number of periods. Therefore, choice A is the best choice.

If You Are Presented with an Offer to Accept Payment