Question

Suppose you win the lottery and you can either take $1400 in a

year or $1000 now. Suppose also that you can invest the$1000 now at
6% interest. Decide which is a better deal and by howmuch.

Answer 1

Better deal will be to take money after one year because there will be a profit of $1400 - $1060 = $340

Explanation:

It is given that there is two option either you take $1400 after one year or $100 now

It is given that you can invest $1000 at a rate of 6% interest

So interest in one year
`=(1000* 6* 1)/(100)=$60`

So amount after 1 year = $1000+$60 = $1060

So better deal will be to take money after one year because there will be a profit of $1400 - $1060 = $340