If the Interest Rate Is 8 Percent, the Present Value

question 149

Multiple Choice

If the interest rate is 8 percent, the present value of $10,000 to be received 10 years from today is about

• A) $21,589.
• B) $9,259.
• C) $4,632.
• D) $10,800.

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Definitions:

Wealth

The abundance of valuable resources or valuable material possessions, including the total of all financial assets minus any liabilities.

Price Elasticity

A measure in economics that shows how the quantity demanded of a good or service responds to a change in its price.

Bushels

A unit of volume that is used primarily in the United States to measure agricultural produce, such as grains, fruits, and nuts.

Pecks

A traditional unit of volume used for dry goods, equivalent to approximately 9 liters or a quarter of a bushel.