Business

Finn Bowen

3 April, 02:46

anner is choosing between two mutually-exclusive investment options. These options have absolutely no risk, and Tanner can always borrow and lend at the risk-free rate. Option 1. He can invest $500 now and get (guaranteed) $550 in one year. Option 2. He can invest $600 now and get (guaranteed) $631.40 back later today. Assume the risk-free interest rate is 3.5%. Which investment should Tanner prefer?

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