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:

Law of Diminishing

Refers to the Law of Diminishing Returns, which states that adding more of one factor of production, while holding others constant, will at some point yield lower per-unit returns.

Marginal Returns

The change in output resulting from a one-unit increase in a particular input, while holding other inputs constant.

Marginal Cost

The rise in overall expenses associated with the production of an extra unit of a product or service.

Average Total Cost

The total cost of production divided by the number of units produced, giving a per unit cost of production.