Answer:
the choice that would maximize the present value of your scholarship is receiving your scholarship in the amounts of $5,000 today and $5,000 next year.
Step-by-step explanation:
Hello, I think I can help you with this
to solve this you must to find the present value in both cases, you can use this equation
where
Va= present value
Vf=final value
n=number of periods ( in this case 1 )
i=interest rate
Step 1
option 1
$5,000 today and $5,000 next year,it would be $5000 that you receive today, and $5000 next year, let's find the presente value of the last one pay
Let
Vf=5000
i=10%=0.1
n=1,(1 year)
put the values into the equation
the presente value will be
5000+4545.45= $9545.4545
you would have $9545.4545 today.
Step 2
option 2
with the second option you have $9000 today
$9545.4545 is greater than $9000
so, the choice that would maximize the present value of your scholarship is receiving your scholarship in the amounts of $5,000 today and $5,000 next year.
Have a great day