If Money If Worth $1,150 Now and $1,205 in 240

question 96

Multiple Choice

If money if worth $1,150 now and $1,205 in 240 days, determine the rate of return that an investor would be indifferent between the two options.

• A) 9.15%
• B) 8.38%
• C) 8.41%
• D) 7.50%
• E) 7.27%

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Definitions:

90-Day Note

A short-term debt obligation that matures or is due to be paid 90 days after its issuance.

Accrued Interest

Interest that has been incurred but not yet paid, typically recorded as an expense for the period it relates to.

Year-End

The conclusion of an accounting period, typically the end of the fiscal or calendar year, when companies finalize their financial statements.

60-Day Note

A financial instrument or a loan agreement that requires repayment of the principal amount along with any accrued interest within 60 days.