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)