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