You can deposit 10,000 into an account paying 9% annual interest either today or exactly 10 years from today. How much better off will you be at the end of 40 years if you decide to make the initial deposit today rather than 1o years from today?

Answer 1

I = rtP = 0.09*40*10,000 = $36,000.

I = 0.09*30*10,000 = $27,000.

36,000 - 27,000 = $9,000 Better by mak-
ing your deposit today.