Chang Lee is going to receive $20,000 six years from now. Soo Lee is going to receive $20,000 nine years from now. Which one of the following statements is correct if both individuals apply a discount rate of 7 percent?
A) The present values of Chang Lee's and Soo Lee's money are equal.
B) In future dollars, Soo Lee's money is worth more than Chang Lee's money.
C) In today's dollars, Chang Lee's money is worth more than Soo Lee's.
D) Twenty years from now, the value of Chang Lee's money will equal the value of Soo Lee's money.
E) Soo Lee's money is worth more than Chang Lee's money given the 7 percent discount rate.

C) In today's dollars, Chang Lee's money is worth more than Soo Lee's

Explanation:

The present value of receipts 6 year hence of amount $20,000 discounted at 7% rate would be: Discounting factor of 1 $ for 6 years at 7 % i.e expressed as:

= 20,000 × 0.6663

= $ 13,327 approx

The present value of $20,000 receipts 9 years hence discounted at 7% rate is given by:

= 20,000 × 0.5439

= 10,879 approx.

As is evident from above, Chang Lee's present value of receipts is more than those of Soo Lee's.

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.