A Customer Makes Two Offers to Settle a Disputed Account

question 149

Multiple Choice

A customer makes two offers to settle a disputed account. He will either pay you $500 today or pay you $650 in three years. Which one of the following is correct if your company earns 10.5% on its
Surplus funds?

• A) The company should accept the $650 offer as it pays $150 more.
• B) The company should accept the $650 offer as it is worth more today.
• C) The company should accept the $650 offer as it is worth $12.42 more today.
• D) The company should accept the $500 offer as it is worth $18.24 more today.
• E) The company should accept the $500 offer as it is worth $512.42 today.