If the Interest Rate Is 5 Percent, What Is the Current

question 44

Multiple Choice

If the interest rate is 5 percent, what is the current value of $110 to be received one year from now?

• A) $104
• B) $73
• C) $220
• D) $116

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Definitions:

Service Charge

A fee collected for services provided, often added to a bill in restaurants, hotels, or other service industries.

Interest

The cost of borrowing money or the return earned on an investment, expressed as a percentage of the principal.

Check Stub

A part of a check that is kept for record-keeping purposes, detailing the check's purpose, date, and amount.

Balance Forward

The amount of money brought forward from a previous statement or bill as the starting point for the next period.