Your uncle offers you a choice of $30,000 in 50 years or $95 today. If money is

discounted at 12 percent, which should you choose?

The present discounted value of $30,000 is about $104. However, I'd still take the $95. I'll be over 100 in 50 years and, well, whats the point? (Actually, this means my own personal discount rate is more than 12%)

we have to discount the value of the future money (to compare apples to apples)

and compare what is the value of 30000 in today's money :

PV = present value

PV(30000) = 30000 / (1+0,12)^50

PV(30000) = $103.8

As PV(30000) > $95 you'd better wait 50 years.

Your age doesn't play any role in this mathematical problem.

To determine which choice is more beneficial, we need to calculate the present value of $30,000 in 50 years at a discount rate of 12 percent.

To calculate the present value (PV) of money in the future, we can use the formula:

PV = FV / (1 + r)^n

Where:
PV = Present value
FV = Future value
r = Discount rate
n = Number of years

In this case, the future value (FV) is $30,000, the discount rate (r) is 12 percent (or 0.12), and the number of years (n) is 50. Plugging these values into the formula, we have:

PV = $30,000 / (1 + 0.12)^50

Using a calculator or a spreadsheet program, we can calculate the present value:

PV = $30,000 / (1.12)^50

PV ≈ $294.26

Therefore, the present value of $30,000 in 50 years at a discount rate of 12 percent is approximately $294.26.

Comparing this to the $95 offered today, it is clear that the $95 is a better option.

Hence, you should choose the $95 today over $30,000 in 50 years, given a discount rate of 12 percent.

To determine which option to choose, we need to calculate the present value of the $30,000 amount in 50 years and compare it to the current amount of $95.

The present value formula can be used to calculate the value of future cash flows in today's dollars. The formula is:

PV = FV / (1 + r)^n

Where:
- PV is the Present Value
- FV is the Future Value
- r is the discount rate
- n is the number of periods

In this case, the future value is $30,000, the discount rate is 12% (or 0.12), and the number of periods is 50.

Now let's calculate the present value of $30,000 using the formula:

PV = $30,000 / (1 + 0.12)^50

PV = $30,000 / (1.12)^50

PV ≈ $2,876.06 (rounded to the nearest cent)

So, the present value of $30,000 in 50 years is approximately $2,876.06.

Now let's compare that with the current amount of $95. Since the present value of $30,000 is significantly higher than $95, we can conclude that choosing the $30,000 in 50 years would be the better option, assuming the discount rate of 12% accurately reflects the opportunity cost of money.