Rusty just graduated from high school and his parents have made him the following offer: They will give Rusty $10,000 now that he can use to buy a car or they will give him $20,000 when he graduates from college to use either as a down payment on a house or to pay off a car. Rusty decides to go to college in the hopes of getting more money in a few years. Which of the following statements would be true regarding Rusty's decision? Rusty understands that it is better to have money now because would get nothing in the future if he does not graduate from college. Using the time value of money, the $10,000 he would receive now would have to grow by more than double in the time that it takes him to graduate from college in order for it to be better to take the $10,000 now. Rusty would need to receive $30,000 now for both the car and down payment on the house because he will need the money in case he wrecks the car. Rusty is making a poor decision because the average high school graduate makes more than someone with an associate's or bachelor's degree.
Rusty just graduated from high school and his parents have made him the following offer: They will give Rusty $10,000 now that he can use to buy a car or they will give him $20,000 when he graduates from college to use either as a down payment on a house or to pay off a car. Rusty decides to go to college in the hopes of getting more money in a few years. Which of the following statements would be true regarding Rusty's decision? Rusty understands that it is better to have money now because would get nothing in the future if he does not graduate from college. Using the time value of money, the $10,000 he would receive now would have to grow by more than double in the time that it takes him to graduate from college in order for it to be better to take the $10,000 now. Rusty would need to receive $30,000 now for both the car and down payment on the house because he will need the money in case he wrecks the car. Rusty is making a poor decision because the average high school graduate makes more than someone with an associate's or bachelor's degree.
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter27: Time Value Of Money (compound)
Section: Chapter Questions
Problem 6E
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Transcribed Image Text:Rusty just graduated from high school and his parents have made him the following offer: They will
give Rusty $10,000 now that he can use to buy a car or they will give him $20,000 when he
graduates from college to use either as a down payment on a house or to pay off a car. Rusty
decides to go to college in the hopes of getting more money in a few years. Which of the following
statements would be true regarding Rusty's decision?
Rusty understands that it is better to have money now because would get nothing in the future if he does
not graduate from college.
Using the time value of money, the $10,000 he would receive now would have to grow by more than double
in the time that it takes him to graduate from college in order for it to be better to take the $10,000 now.
Rusty would need to receive $30,000 now for both the car and down payment on the house because he will
need the money in case he wrecks the car.
Rusty is making a poor decision because the average high school graduate makes more than someone with
an associate's or bachelor's degree.
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