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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