Suppose the Interest Rate Is 5 Percent Per Year

question 89

Multiple Choice

Suppose the interest rate is 5 percent per year.What is the present value of the $210 that will be received two years from today?

• A)$210
• B)$190.48
• C)$231.53
• D)$200
• E)$42

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Definitions:

Lowest Terms

The simplest form of a fraction when both the numerator and the denominator are reduced to their smallest possible numbers.

Common Shares

Equity investments representing ownership rights in a corporation, entitling holders to vote on company matters and receive dividends.

Lowest Terms

The simplest form of a fraction, where the numerator and denominator are reduced to their smallest values.

Purchasing Power

The value of currency expressed in terms of the amount of goods or services that one unit of money can buy.