Question

? Question

Think about your answer in part B. Will 10 payments of $100,000 over 9 years have the same value as $1 million today?
Select the correct answer from each drop-down menu.
Ten payments of $100,000 over 9 years
of all the payments would be
the same value as $1 million today. The present value
$1 million in today's money.
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Nov 1
8

Answer 1

Explanation:

To determine if ten payments of $100,000 over 9 years have the same value as $1 million today, we need to calculate the present value of those future payments. The present value tells us what those future payments are worth in today's money. We can use the present value formula to calculate it:

Present Value = Future Value / (1 + r)^t

Where:

Future Value is the total of all the future payments, which is 10 payments of $100,000, totaling $1,000,000.

r is the discount rate, which is not provided in your question.

t is the time in years, which is 9 years in this case.

Without knowing the discount rate (r), it's impossible to determine whether the ten payments of $100,000 over 9 years have the same value as $1 million today. The discount rate reflects the opportunity cost of money and is essential for present value calculations. Please provide the discount rate, and I can help you calculate the present value and make a comparison.