Suppose the Interest Rate Is 8 Percent

question 101

Multiple Choice

Suppose the interest rate is 8 percent.Consider three payment options.
1) $300 today.
2) $330 one year from today.
3) $360 two years from today.
Which of the following is correct?

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

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Definitions:

National Insurance

A system of compulsory payments made by employees and employers to fund various types of state benefits and healthcare.

Easements

Rights granted to use the property of another for a specific purpose, such as right of way.

Fixtures

Items that are originally personal property but become real property when attached in a permanent manner to land or a building.

Lost Property

Property that is found where it appears to have been left unintentionally, such as items lost by their rightful owner.