The Net Present Value of $1,000 Received One Year from Now

question 90

Multiple Choice

The net present value of $1,000 received one year from now will

• A) increase with the interest rate.
• B) exceed $1,000 as long as the interest rate is positive.
• C) exceed the net present value of $1,000 to be received two years from now.
• D) equal $1,100 if the current interest (discount) rate is 10 percent.

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Definitions:

Tax Revenue

The income that is gained by governments through taxation, which is used to fund public services and goods.

Excise Tax

A tax levied on specific goods, services, or transactions, often targeted at commodities considered harmful, like alcohol and tobacco, or on luxury items.

Fried Twinkies

A snack created by deep-frying Twinkies, often resulting in a crispy outside and soft, warm inside, popular in fairs and festivals.

Tax Burden

The total impact of taxes on an individual or business, including the effects on income and purchasing power.