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Questions and Answers
Why would someone prefer to receive $100 today instead of one year from today?
Why would someone prefer to receive $100 today instead of one year from today?
- Because they would rather have $105 a year from now
- Because they are indifferent to receiving the money today or one year from now
- Because they can save the money and earn interest on it
- Because they can spend the money now and get immediate satisfaction (correct)
What is the time value of money?
What is the time value of money?
- The value at which you are indifferent to receiving money today or one year from now (correct)
- The value of money that increases over time
- The value of money that decreases over time
- The value of money that remains constant over time
If someone is offered $100 today or $105 a year from now, which option would they most likely choose according to the text?
If someone is offered $100 today or $105 a year from now, which option would they most likely choose according to the text?
- $110 a year from now
- $100 today (correct)
- $120 a year from now
- $105 a year from now
What is one benefit of receiving money today instead of one year from now, even if someone decides to save the money?
What is one benefit of receiving money today instead of one year from now, even if someone decides to save the money?
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What is the rational decision when offered $100 today or $105 a year from now?
What is the rational decision when offered $100 today or $105 a year from now?
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