Which would you rather have? a)$100,8 years from now at a 2% interest or b)$100,2 years if the interest rate is 8%.

Interest Rate

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal, per period of time.

Years From Now

Projected or anticipated time in the future, often used in planning, forecasting, or speculation about future conditions or situations.

Scrutinize available investment alternatives to elect the one with the most significant financial return.
Apprehend the correlation between interest rates, time intervals, and the anticipated value of investments.

Verified Answer

Final Answer :

a)$85.35 b)$85.73
The present value of b)is greater than the present value of a).

Learning Objectives

Scrutinize available investment alternatives to elect the one with the most significant financial return.
Apprehend the correlation between interest rates, time intervals, and the anticipated value of investments.