Suppose you were offered $2,000 to be delivered in 1 year. Further suppose you had the alternative of putting money into a safe certificate of deposit paying annual interest at 10 percent. Would you pay $1,900 in exchange for $2,000 after 1 year? What is the maximum amount you would pay for the offer of $2,000? Suppose the offer was $2,000, but delivery was to be in 2 years instead of 1 year. What is the maximum amount you would be willing to pay?
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