Suppose That the Interest Rate Is 8 Percent

question 164

Multiple Choice

Suppose that 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)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:

Alkylation Reaction

A chemical reaction in which an alkyl group is transferred to an organic compound, often increasing the compound's molecular size.

Dimethylamine

Dimethylamine is a simple amine consisting of two methyl groups attached to a nitrogen atom, used in a wide range of chemical applications, including as a precursor for certain chemicals.

3-pentanone

An organic compound characterized by a five-carbon chain with a ketone functional group at the third carbon atom.

Enamine

Derivatives of alkenes formed from the reaction between a secondary amine and a carbonyl group, often used as intermediates in organic synthesis.