In Which of the Following Instances Is the Present Value

question 2

Multiple Choice

In which of the following instances is the present value of the future payment the largest?

• A)You will receive $1,000 in 5 years and the annual interest rate is 5 percent.
• B)You will receive $1,000 in 10 years and the annual interest rate is 3 percent.
• C)You will receive $2,000 in 10 years and the annual interest rate is 10 percent.
• D)You will receive $2,400 in 15 years and the annual interest rate is 8 percent.

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Definitions:

Capital Balances

The amount of equity each partner or shareholder has in an enterprise, often represented as their ownership stake.