Determination of the time value of money

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a. An individual's opportunity cost is 12%, and the individual is offered to make a one-time payment in exchange for receiving $100,000 exactly 4 years from now. What is the maximum amount that this individual would be willing to pay now to receive the payment mentioned above? You may choose any period as the base period for determination of the time value of money. b. An individual makes annual payment of $6000 in a retirement account which has 4% annual interest rate. What will be the value of the account after 40 years? (annual compounding) Provide your work in detail and explain. Provide your work in detail and explain. Provide references for the content.

Reference no: EM131502773

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