In calculating the present value of $1,000 to be received 5 years from today, the discount factor has been calculated to be .7008. What is the apparent interest rate?
A) 5.43%
B) 7.37%
C) 8.00%
D)9.50%

Name: In calculating the present value of $1,000 to be received 5 years from today, the discount factor has been calculated to be .7008. What is the apparent interest rate? A) 5.43% B) 7.37% C) 8.00% D)9.50%
Brand: Quizplus
Rating: 4.8 (41 reviews)

Question

Quizplus · Accepted Answer

FV = PV(1 + r)^t1 = .7008(1 + r)⁵r = .0737, or 7.37%

In Calculating the Present Value of $1,000 to Be Received