Your father offers you a choice of $135,000 in 13 years or $46,500 today. Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods.
a. 1. If money is discounted at 10 percent, what is the present value of the $135,000? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
2. Which offer should you choose?
$135,000 in 13 years
$46,500 today
b-1. Now assume the offer is $135,000 in 10 years or $46,500 today. What is the present value of the $135,000 at 10 percent for 10 years? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
b-2. Now, which offer should you choose?
$46,500 today
$135,000 in 10 years