Final answer:
The average investor would prefer to receive $1,000 today rather than $1,000 in five years. This is because of the concept of time value of money and the potential for investment returns.
Step-by-step explanation:
The average investor would prefer to receive $1,000 today rather than $1,000 in five years. This is because of the concept of time value of money. Money received today has more value than money received in the future, due to factors such as inflation and the potential to earn a return on investment.
By investing the $1,000 received today, the investor has the opportunity to earn a return over the five-year period and potentially increase the value of their investment. For example, if the investor achieves a 7% annual rate of return, the $1,000 could grow to $1,402.55 after five years.
Therefore, considering the time value of money and the potential for investment returns, it is generally more advantageous for an investor to receive money today rather than in the future.