Math Problem Statement
(Present-value comparison) Much to your surprise, you were selected to appear on the TV show "The Price is Right." As a result of your prowess in identifying how many rolls of toilet paper a typical American family keeps on hand, you win the opportunity to choose one of the following:
$1 comma 2001,200
today,
$5 comma 0005,000
in
1515
years, or
$33 comma 00033,000
in
3030
years. Assuming that you can earn
77
percent on your money, which should you choose?
Question content area bottom
Part 1
If you are offered
$5 comma 0005,000
in
1515
years and you can earn
77
percent on your money, what is the present value of
$5 comma 0005,000?
$enter your response here
(Round to the nearest cent.)
Solution
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Math Problem Analysis
Mathematical Concepts
Present Value
Interest Rate
Time Value of Money
Formulas
PV = FV / (1 + r)^n
Theorems
Time Value of Money
Suitable Grade Level
Undergraduate Level (Finance/Economics)
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