TVM:Which of the following assets

Which of the following assets has a higher present worth?

  • A
  • B
  • C
  • D

Answer:
D

There are two key ideas to keep in mind. More is better and sooner is better. If you compare A and B, you see that you get the equal benefit sooner with A. Similarly, if you compare C and D, you get the equal benefit sooner with D. Then take a look at A and D. Notice that you get more in the same time period with D.

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