Which,if Any,of the Present Values Below Are Computed Correctly

question 190

Multiple Choice

Which,if any,of the present values below are computed correctly?

• A)A payment of $100 to be received one year from today,with a 2 percent interest rate,has a present value of $98.81.
• B)A payment of $200 to be received two years from today,with a 3 percent interest rate,has a present value of $188.52.
• C)A payment of $300 to be received three years from today,with a 4 percent interest rate,has a present value of $234.34.
• D)None of the above are correct to the nearest cent.

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Definitions:

Vesting

The process through which an employee gains nonforfeitable rights over employer-contributed assets or benefits.

Incidental Beneficiary

An individual or entity that may benefit from the execution of a contract despite not being a direct party to the agreement.

Donee Beneficiary

In contract law, a person who is not a party to the agreement but is intended by the contracting parties to benefit from its provisions.

Oil Refinery

An industrial processing plant where crude oil is transformed and refined into more useful products such as gasoline, diesel fuel, and jet fuel.