Suppose the Interest Rate Is 8 Percent

question 147

Multiple Choice

Suppose the interest rate is 8 percent. Consider three payment options:Suppose the interest rate is 8 percent. Consider three payment options: 1. $200 today.
2) $220 one year from today.
3) $240 two years from today.
Which of the following is correct?

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