Question

1.

Assuming the interest rate is 6 percent, which of the following has the greatest present value?

$100 paid today plus $100 paid in one year plus $100 paid in two years

$150 paid in one year plus $140 paid in two years

$300 paid in two years

$285 today

2.

Suppose the interest rate is 10 percent. Which of the following payments has the largest present value?

You receive $75.13 today.

You receive $82.64 one year from today.

You receive $90.91 two years from today.

All of these payments have the same present value to the nearest cent.

3.

Answer 1