Your brother has offered to give you either $10,000 today or $20,000 in 9 years. if the interest rate is 7% per year which option is preferable?

receive $20000 in 9 years is preferable because its present value is greater than $10000 i.e $10878.67

Explanation:

given data

offered = $10,000 or $20,000  

time = 9 year

interest rate = 7%

solution

here when you receive =  $20000 received in 9 years

so present value =       .................1

present value =

present value  = $10878.67

so here receive $20000 in 9 years is preferable because its present value is greater than $10000

u = 30

continuing your method

= +

subtract from both sides

= - thus

= -

= ⇒ u = 30

answer; ///deficit;