Final answer:
To determine if you should take $X today equivalent to $1,500 in 5 years at a 4% interest rate, use the future value formula to calculate the present value. You would prefer to take the $X today if it is more than the present value calculated using the rearranged future value formula.
Step-by-step explanation:
The subject matter of the question involves the concept of present value and future value in finance, which is part of mathematics. When comparing the value of money received today versus in the future, the present value needs to be calculated. Using the given interest rate, you can determine what amount of money ($X) received today would be equivalent to receiving $1,500 in 5 years. To do this, the future value formula is used, which includes the future value, the interest rate, and the number of years.
The future value formula is generally: Future value received years in the future = Present Value (1 + Interest Rate)number of years
To find the present value which is equivalent to $1,500 in 5 years at a 4% interest rate, the formula is rearranged to solve for the present value ($X): $X = $1,500 / (1 + 0.04)5