Question

A dollar received today is

worth less than a dollar received in the future discounted at 12% interest.

worth more than a dollar received at any time in the future.

worth less than a dollar received in the future if the current interest rate is lower than the anticipated future interest rate.

none of these answer choices are correct.

Answer 1

Ans:

A dollar received today is worth more than a dollar received at any time in the future because even if interest rate is less than anticipated it will still add some value to the future $.

For example if you have a option to receive $100 today instead on $100 dollar at any time in future. Let suppose after three month. The amount received today is always worth more than from the amount received in future. Becasue even if you invest the amount receive today even at less than 1% still it will fetch more than 100% dollar after three months.

So correct answer is Option B.

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