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The price is right

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Reference no: EM131461002

Much to your surprise, you were selected to appear on the TV show? "The Price is Right." As a result of your prowess in identifying how many rolls of toilet paper a typical American family keeps on hand, you win the opportunity to choose one of the following:

$2,000 today, $7,000 in 14 years, or $25,000 in 24 years. Assuming that you can earn 11 percent on your money, which should you choose?

If you are offered $7,000 in 14 years and you can earn 11 percent on your money, what is the present value of $7,000 ?(Round to the nearest cent.)

If you are offered $25,000 in 24 years and you can earn 11 percent on your money, what is the present value of $25,000 (Round to the nearest cent.)

Which offer should you choose? (Select the best choice below.)

A. Choose $25,000.00 in 24 years because its present value is the highest.

B. Choose $2,000.00 today because its present value is the highest.

C. Choose $7,000.00 in 14 years because its present value is the highest.

Reference no: EM131461002

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