Asked by
Derrick Warren
on Dec 12, 2024
Verified
If the interest rate is 7 percent, what is the present value of $100 received two years from now.
A) $107
B) $114.49
C) $87.34
D) $93.45
Present Value
The contemporary valuation of an anticipated sum of money or cash flow sequence, based on a given return rate.
Interest Rate
The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.
- Determine the present value of forthcoming cash streams under different interest rates.
- Gain insight into the relationship between interest rate adjustments and the present worth of future cash flows.
Verified Answer
AB
Learning Objectives
- Determine the present value of forthcoming cash streams under different interest rates.
- Gain insight into the relationship between interest rate adjustments and the present worth of future cash flows.