If the Interest Rate Is 5 Percent, the Net Present

question 13

Multiple Choice

If the interest rate is 5 percent, the net present value of $200 to be received two years from now is

• A) $165.29.
• B) $181.41.
• C) $200.
• D) $210.

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Definitions:

Formal Promise

An official commitment or assurance, often in writing, to perform a specified action or uphold a certain condition.

Interest Payment

The amount paid over a period for borrowing money or delaying the repayment of a debt, typically expressed as an annual percentage of the principal.

Maturity Date

The date on which a financial obligation or investment becomes due for payment or expires, marking the end of its term.

Bank Loan

A bank loan is a sum of money lent by a bank to a borrower at an agreed interest rate and repayment schedule.