Which Is More Valuable, Receiving $775 Today or Receiving $885

question 23

Multiple Choice

Which is more valuable, receiving $775 today or receiving $885 in 2.5 years if interest rates are 7.25 percent?

• A)Receiving $775 today
• B)Receiving $885 in 2.5 years
• C)They are worth the same amount
• D)Need more information to make a determination

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Definitions:

Investor

An individual or entity that allocates capital with the expectation of receiving financial returns.

National Saving

The total amount of savings in a country, equal to the sum of private and public savings; it represents the difference between a nation's income and consumption.

Public Saving

The difference between tax revenues and government spending, representing the amount of surplus or deficit in the government's budget.

Private Saving

The portion of households' income that is not used for consumption or paying taxes, and is instead saved.