If the Interest Rate Is 10%,what Is the Present Discounted

question 47

Multiple Choice

If the interest rate is 10%,what is the present discounted value of receiving $100 now,$140 next year,and $200 two years from now?

• A) $440
• B) $409.09
• C) $386
• D) $392.56

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Definitions:

Pre-tax Cost

The expense or cost associated with an investment or project before any taxes are deducted.

Marginal Tax Rate

The rate at which your last dollar of income is taxed, indicating the percentage of tax applied to your next dollar of taxable income.

Coupons

The interest payments made to bondholders, typically on an annual or semi-annual basis.

Yield-to-maturity

The total return anticipated on a bond if it is held until the end of its lifetime, taking into account both interest payments and capital gains or losses.