Hypothetically... you can have 20k now, guaranteed, or a 50/50 shot at 40k within the next 24 months... what do you want??
2007-12-04 11:37:02 · 9 answers · asked by Keep On Trucking 4 in Business & Finance ➔ Personal Finance
I'll take the $20,000 now. The expected value of the possible $40,000 pay out is $20,000 ($40,000 * 50%), which is the same as the guarenteed $20,000, but I'd have to wait two years for it. Taking the time value of money into account, $20,000 today is the optimum choice.
2007-12-04 11:41:27 · answer #1 · answered by Kathryn 6 · 2⤊ 0⤋
$20k today, due to credit risk (the risk that whoever was going to pay me the $40K goes broke within the next 24 months) and time-value of money ($1 today is worth more than $1 in the future).
An more interesting question would be whether someone would rather have a 50/50 shot at $40K today, or $20K guaranteed in two years.
2007-12-04 12:28:39 · answer #2 · answered by Dave 2 · 1⤊ 0⤋
Give me $20,000 NOW and there is a 100% chance I will be $40,000 better off in 24 months. Which would YOU choose?
2007-12-04 13:00:34 · answer #3 · answered by STEVEN F 7 · 0⤊ 0⤋
I would take the $20,000. I could pay off some bills that I'm paying interest on. I would rather take the $20,000 knowing it's for sure. I'd hate to "hope" for the $40,000 further down the line.
2007-12-04 15:30:11 · answer #4 · answered by shygrl33 5 · 0⤊ 0⤋
$20k now. Although both seem equal relative to the probability of 'winning'... they are not. You must consider the time value of money, and that $20k today can gain interest over the next few years as you're waiting to see if you 'win'.
2007-12-04 13:59:30 · answer #5 · answered by Nep 6 · 1⤊ 0⤋
$20K now. You might get run over by a bus within the next 24 months.
2007-12-04 12:14:06 · answer #6 · answered by john p 3 · 0⤊ 1⤋
i would take the 20k now because there is a chance that that 40k will go threw the way you want it to
2007-12-04 11:47:35 · answer #7 · answered by robert s 1 · 1⤊ 0⤋
that is going to likely be interesting to determine if Reyes and Hector Herrera get enjoying time in Porto,and win a place. Chicharito isn't yet guard. the hot coach will determine even if if he remains or not. JDS will generally probably be leaving. If I keep in mind, Barcelona positioned him on the pass checklist. i'm hoping Vela could make it because of the fact he and his club deserve for having a great season
2016-12-17 07:22:19 · answer #8 · answered by ? 4 · 0⤊ 0⤋
20K now, "a bird in the hand is worth two in the bush"
Old Guy
2007-12-04 11:44:34 · answer #9 · answered by Anonymous · 3⤊ 2⤋