Suppose the Interest Rate Is 8 Percent

question 389

Multiple Choice

Suppose the interest rate is 8 percent. Consider three payment options.
1) $300 today.
2) $330 one year from today.
3) $360 two years from today.
Which of the following is correct?

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

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Definitions:

Sadness

A human emotion characterized by feelings of sorrow, disappointment, or unhappiness, often a transient and normal response to life's setbacks.

Possible Selves

The aspect of self-concept that includes individuals' ideas of what they might become, what they would like to become, and what they are afraid of becoming.

Potential

The capacity to develop, achieve, or become something more in the future.

Expected

An outcome or event regarded as likely to happen based on prior knowledge, trends, or logical prediction.