Final answer:
To determine which option would be preferable to receive, we need to calculate the present value of each amount using the interest rate of 9%. Option A, $99 four years from now, has the highest present value and would be the preferable option to receive.
Step-by-step explanation:
In order to determine which option would be preferable, we need to calculate the present value of each amount using the interest rate of 9%. To calculate the present value, we can use the formula:
Present Value = Future Value / (1 + interest rate)^n
where Future Value is the amount to be received in the future, interest rate is the annual interest rate, and n is the number of years until the amount is received.
- Option A: $99 four years from now. Present Value = 99 / (1 + 0.09)^4 = $72.18
- Option B: $89 three years from now. Present Value = 89 / (1 + 0.09)^3 = $70.97
- Option C: $72 one year from now. Present Value = 72 / (1 + 0.09)^1 = $66.06
- Option D: $80 two years from now. Present Value = 80 / (1 + 0.09)^2 = $68.99
Based on these calculations, the option with the highest present value is option A, which would be preferable to receive.