At Which Interest Rate Is the Present Value of $196

question 209

Multiple Choice

At which interest rate is the present value of $196.85 three years from today equal to $175 today?

• A)2 percent
• B)4 percent
• C)6 percent
• D)8 percent

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Definitions:

Net Income

The total earnings of a company after all expenses and taxes have been subtracted from total revenue.

Notes Payable

A written promise to pay a certain amount of money, usually including interest, by a specified date or on demand.

Net Purchases

The total amount of purchases after subtracting returns, allowances, and discounts.

Revolving Credit Agreement

A credit facility allowing a borrower to withdraw, repay, and redraw loans repeatedly up to a certain credit limit.