An Investment Will Pay You $100 in One Year and $200

question 30

Multiple Choice

An investment will pay you $100 in one year and $200 in two years.If the interest rate is 5%,what is the present value of these cash flows?

• A)$305.00
• B)$285.71
• C)$276.65
• D)258.32
• E)$272.11

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Definitions:

Official Money Supply

The total amount of monetary assets available in an economy at a specific time, as measured and published by the central bank.

Precautionary Demand

The desire to hold cash or liquid assets as a safeguard against potential financial emergencies.

Speculative Demand

The demand for assets or goods not for their immediate consumption or use, but for the purpose of resale at a higher price in the future.

Transaction Demand

The demand for money as a medium of exchange, influenced by the level of economic activity.