Which value is higher? a)$1,000 today or b)$10,000 in 20 years if the interest rate is 12%.

Interest Rate

The cost of borrowing money or the reward for saving, usually expressed as a percentage of the principal amount per annum.

Years From Now

This term projects a future timeline or point in time from the present moment.

Evaluate various investment opportunities to identify the most financially beneficial choice.
Perceive the link between interest rates, time frames, and the eventual value of investments.

Verified Answer

Final Answer :

a)1,000;b)$10,000 x 10.37 = $1,037
The present value of b)$1,037 is greater than the present value of a)$1,000.

Learning Objectives

Evaluate various investment opportunities to identify the most financially beneficial choice.
Perceive the link between interest rates, time frames, and the eventual value of investments.