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Question for people with economics knowledge.?

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Which would you rather have, if you have only 2 options: $100 in 8 years from now at a 2 percent interest or $100 in 2 years if the interest rate is 8 percent. And can also explain me why? Using economics calculations. Thanks.

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  1. If you put them in bank for these conditions then 2 years and 8 percents is better for you.

    In general situation will look like this:

    Interest:....1.02........1.08

    0............100.00....100.00

    1............102.00....108.00

    2............104.04....116.64

    3............106.12

    4............108.24

    5............110.41

    6............112.62

    7............114.87

    8............117.17

    So in two years you will receive more in second case (with 8% interest) and can do with your interest whatever you wish to over next 6=8-2 years e.g. reinvest again or something different.

    Main point here - you will receive more money over the shorter period of time.

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