A Lender Is Promised a $100 Payment (Including Interest) One

question 100

Multiple Choice

A lender is promised a $100 payment (including interest) one year from today. If the lender has a 6% opportunity cost of money, he/she should be willing to accept what amount today?

• A) $100.00
• B) $106.20
• C) $96.40
• D) $94.34

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Definitions:

Supply

The total amount of a good or service available for purchase at any given price level, within a specified period.

Law of Demand

A fundamental economic principle stating that as the price of a product decreases, demand for it usually increases, and vice versa.

Surpluses

Situations in which the quantity of a good or service supplied exceeds the quantity demanded at the current price.

Market Prices

Refers to the specific values at which commodities, securities, or services are traded in a competitive marketplace.