Final answer:
Option A) $1,000 now has the highest present value compared to receiving the same amount in the future due to the potential earnings from interest, illustrating the concept that a dollar today is worth more than a dollar in the future.
Step-by-step explanation:
The question concerns the concept of present value, which is a fundamental principle in finance and economics. The present value of money refers to the current worth of a sum that is to be received in the future, taking into account a specific interest rate. When comparing the present value of $1,000 now to $1,000 received in the future, the $1,000 right now always has the highest present value because it is not affected by the time value of money. Money available now can be invested or earn interest, which is not possible with money received in the future.
Therefore, Option A) $1,000 now has the highest present value compared to receiving the same amount in one, two, or three years. The concept of present value illustrates that due to the potential earnings from interest, a dollar today is worth more than a dollar in the future. In our examples with bonds, it's important to understand that money received now, such as the $15 million in present or the $3,000 from the bond issuance, has a higher present value compared to future payments or the future value of that same amount.