Which instrument has the higher present value

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Reference no: EM132003588

You have a choice between a financial instrument that pays $11,500 one year from now and another that pays $14,000 five years from today. If the market rate of interest is 7%, which instrument has the higher present value? which would you be willing to pay more for? Be sure to both to show how you calculated your answer and to define all the variables in any mathematical equation you use.

Reference no: EM132003588

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