Suppose the Interest Rate Is 5 Percent

question 112

Multiple Choice

Suppose the interest rate is 5 percent. Consider four payment options: Option A: $500 today.
Option B: $515 one year from today.
Option C: $615 two years from today.
Option D: $690 three years from today.
​
Which of the payments has the highest present value today?

• A)Option A
• B)Option D
• C)Option B
• D)Option C

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