Suppose the Interest Rate Is 7 Percent

question 112

Multiple Choice

Suppose the interest rate is 7 percent.Consider four payment options:
Option A: $500 today.
Option B: $550 one year from today.
Option C: $575 two years from today.
Option D: $600 three years from today.
-Which of the payments has the lowest present value today?

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Caregiver

A person who provides direct care, support, and assistance to someone else, typically to those who are unable to care for themselves due to illness, disability, or age.

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A stage of human development typically ranging from around 40 to 65 years of age, characterized by stability, maturity, and increased responsibilities.

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A state or behavior where an individual is not easily accessible on an emotional level, often appearing aloof or detached.

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The gradual fading of communication or connection between individuals, often resulting in a loss of relationship or awareness.