Steve Is Offered an Investment Where for Every $1

Multiple Choice

Steve is offered an investment where for every $1.00 invested today, he will receive $1.10 in fiveyears' time. Steve concludes that in five years' time he will have $1.10 for every $1.00 invested and that this investment will increase his personal value. What is Steve's major error in reasoning when making this decision?

A) Costs and benefits must be in the same terms to be compared.
B) The value of the cash he has today is greater than the value of the cash he may have in the future.
C) There may be other investments that he can make that will offer even bigger benefits.
D) The investment may have hidden costs that will reduce the amount of benefit he receives.