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    Time value of money

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    Sharon Smith will receive $1 million in 50 years. The discount rate is 14. As an alternative, she can receive $2,000 today. Which should she choose?
    $1 million dollars in 50 years
    $2,000 today
    she should be indifferent
    need more information

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    Solution Preview

    In order to make the decision we need to compare the present value of the two alternatives.
    $2,000 is to be received today, so the ...

    Solution Summary

    The solution explains how to choose among alternatives using the time value of money