You Are Given the Choice Between Receiving $100,000 Today or $100,000

question 17

Multiple Choice

You are given the choice between receiving $100,000 today or $100,000 in one year.Which of the following statements is accurate?

• A)You would prefer to receive $100,000 today,as you could invest the money and in one year have much more than the original $100,000.
• B)You would prefer to receive $100,000 today,as the present value of receiving $100,000 in one year is much less than $100,000.
• C)You would prefer to receive $100,000 today due to the time value of money.
• D)All of the above statements are accurate.
• E)None of the above statements are accurate.

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Definitions:

Common Law

Common Law is a body of unwritten laws based on legal precedents established by the courts.

Mirror Image

A rule in contract law stating that an offer must be accepted exactly with no modifications; the acceptance must "mirror" the offer.

Mutual Assent

Mutual assent is the agreement between parties to enter into a contract, demonstrated by offer and acceptance.

Counteroffer

A proposal made in response to an initial offer, containing different terms that must be accepted for a contract to be legally binding.