If the market rate of interest is 10%, a rational person would just as soon receive $1,100 three years from now as what amount today (round to the nearest dollar)?
A) $1,100
B) $783
C) $1,000
D) $826

Question

Quizplus · Accepted Answer

To find the present value of $1,100 received three years from now at a 10% interest rate, use the formula: PV = FV / (1 + r)^n. Here, FV = $1,100, r = 0.10, and n = 3. PV = $1,100 / (1.10)^3 = $826 (rounded to the nearest dollar).

If the Market Rate of Interest Is 10%, a Rational