00:01
In this question, you are given that you have the choice of receiving either $110 ,000 now or you have the choice of receiving $39 ,000 now with $77 ,000 two years from now, compounded two years from now where the rate of interest is going to be 4 .9 % compounded annually.
00:25
Now we have to find out which option is going to be better.
00:29
So in first option you have in first option amount a amount or you can say yeah amount is going to be amount is given to be one hundred and ten thousand dollars now for the second option we have thirty nine thousand dollars plus this seventy seven thousand dollars two years from now so this amount will be two years from now two years from now two years from now amount is going to be a equal to using the formula p1 plus r divided by 100 n t and this is going to be since the principal amount is 77 ,000 which is compounded annually at the rate of interest of 4 .9 so the value of n is 1 and 2 years value of t is 2 so this is going to be 2 so a will be equivalent to 77 ,000 multiplied by 1 .049 square which is going to be 77 ,000 multiplied by 1 .104 and multiplying this, this is going to give us amount is approximately equal to 84 ,700 30 .877.
02:07
Okay.
02:08
So this is the amount.
02:08
So in second option, total amount is going to be in second option amount is going to be amount is going to be $39 ,000 plus this amount 84 ,730 .877.
02:29
So this is going to be a total of 123 .7 .877...