Answer:
You should take into consideration the time value of money, inflation rates, and real and nominal interest rates.
Explanation:
Money today tends to be more valuable than money in the future if it does not earn interest, because of inflation. $5,000 dollars today are worth more than $5,000 dollars 5 years from now.
You should also take into account inflation rates. As we can see, $5,500 is 10% higher than $5,000, so if inflation in one year is less than 10%, you will be obtaining more purchasing power by receiving the $5,500 in one year. However, if inflation ends up being higher than 10%, you will be better off with the $5,000 today.
Finally, nominal and real interest rates should also be taken into account. Nominal interest rate is the rate that is agreed upon the investment without taking into account inflation, while real interest rates is nominal interest rates minus inflation.
