Option 2. Although you would only be receiving $12,000 per year, you would be earning 5% on your investment, which would compound over the ten years. This would result in a larger sum of money than if you had taken the lump sum of $100,000 today.
What is investment?
An investment is the purchase or item purchased with the intention of earning income or increasing in value. An rise in the value of an asset over time is referred to as appreciation. When a person buys a good as just an investment, the intention is not to eat the good but rather to use it to create wealth in the future. An investment is always the outlay of certain resource presently, hard work, money, or a resource the hope of a greater payoff later than what was initially put in. For example, an investor may buy a monetary asset now with the expectation that it will generate income in the future or that it will be sold at a higher price later for a profit.
To learn more about investment
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