You are offered 

​$100 comma 000100,000 

today or 

​$290 comma 000290,000 

in 

1111 

years. Assuming that you can earn 

1212​% 

on your​ money, which should you​ choose?  

To determine which option you should choose, we need to compare the value of $100,000 today with the future value of $290,000 in 11 years. To make a fair comparison, we will calculate the present value (PV) of the $290,000 to be received in 11 years, assuming a 12% annual interest rate.

The formula for the present value (PV) of a future sum is:

\[
PV = \frac{FV}{(1 + r)^t}
\]

Where:
- $FV$ is the future value ($290,000)
- $r$ is the interest rate (12% or 0.12)
- $t$ is the time in years (11 years)

Let's calculate this value.The present value (PV) of receiving $290,000 in 11 years at a 12% interest rate is approximately $83,368.07.

Since this present value is less than the $100,000 offered today, you should choose the $100,000 today.

Would you like further details or have any questions?

Here are 5 related questions:
1. What is the future value of the $100,000 if invested for 11 years at 12%?
2. How would changing the interest rate to 10% affect the decision?
3. What is the break-even interest rate for both options to be equal?
4. What is the importance of time value of money in investment decisions?
5. How does compound interest affect long-term investments?

**Tip:** Always consider the impact of inflation on the real value of money over time.

You are offered $100,000 today or $290,000 in 11 years. Assuming that you can earn 12% on your money, which should you choose?

Understand the decision between receiving $100,000 today or $290,000 in 11 years by calculating the present value at a 12% interest rate. Learn key financial concepts such as the Time Value of Money and Present Value to make informed investment choices. Suitable for students in Grades 10-12.

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