Question

Wylie has been offered the choice of receiving $5,000 today or an agreed-upon amount in 1 year. While negotiating the future amount, Wylie notes that he would be willing to take no less than $5,700 if he has to wait a year. What is his TVOM in percent? Wylie has been offered the choice of receiving ,

Answer 1

The answer is 14%

Step-by-step explanation:

Formula for Future value (FV) FV = PV (1+ni)

Whereas FV= Future value, PV = present value, n= number of years, i= TVOM in percentage

Rearranging the formula for i

i = (FV/PV)-1

So, i = (5,700/5,000)-1

i = 1.14-1

i = 0.14

i = 14%

(0.14x100=14%)