Suppose the Interest Rate Is 8 Percent

question 178

Multiple Choice

Suppose 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)Option 1 has the highest present value and Option 2 has the lowest.
• B)Option 2 has the highest present value and Option 3 has the lowest.
• C)Option 3 has the highest present value and Option 1 has the lowest.
• D)None of the above is correct.

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Definitions:

Epiglottis

A cartilage structure shaped like a leaf, positioned behind the tongue, that seals the windpipe while swallowing to stop food from getting into the breathing passage.

Nasal Vestibule

The frontmost part of the nasal cavity, lined with skin and containing hair follicles, that filters larger particles from inhaled air.

Nasal Cavity

The large air-filled space above and behind the nose in the middle of the face, involved in breathing and the sense of smell.

Posterior

The back or rear position in relation to another object or direction, opposite to anterior.