Suppose the Interest Rate Is 8 Percent

question 178

Multiple Choice

Suppose the interest rate is 8 percent.Consider three payment options:
1) $200 today.
2) $220 one year from today.
3) $240 two years from today.
Which of the following is correct?

• A)Option 1 has the highest present value and Option 2 has the lowest.
• B)Option 2 has the highest present value and Option 3 has the lowest.
• C)Option 3 has the highest present value and Option 1 has the lowest.
• D)None of the above is correct.

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Definitions:

Habituation

A psychological learning process wherein there is a decrease in response to a stimulus after being repeatedly exposed to it.

Egalitarian

A principle or belief in the equality of all people, especially in political, economic, or social life.

Sensitivity

Sensitivity is the capacity of an individual to perceive, feel, or be aware of external stimuli, internal states, or the emotions of others.

Gender Awareness

The understanding and recognition of gender and its roles in society, typically developed in early childhood.