False, because the interest is the amount of money generated on top of the money borrowed.
Answer:
It is more profitable to receive $23,750 today than $25,000 in one year.
Explanation:
Giving the following information:
Future Value= $25,000
Present Value= $23,750
Risk-free interest rate= 6%
<u>We need to calculate the future value of $23,750. If it is higher, it is more convenient to receive $23,750 today.</u>
FV= PV*(1+i)^n
FV= 23,750*(1.06^1)
FV= $25,175
It is more profitable to receive $23,750 today than $25,000 in one year.
He most likely would have benefited by diversifying..is the answer