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Discussion

This example is the same as the example of trading gold for silver presented in the text.

The price today of receiving $1.04 in one year is $1.

The price today of receiving $1 today is of course $1.

After we convert the values using these prices we do not ask whether to trade $X today for $Y in one year but rather should we trade $X today for $W today.  

Importantly: $Y in one year and $W today are equivalent.

In these terms the choice is clear: is X 

We will discuss and extend this idea as we go forward.

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