The one-year discount factor at an interest rate of 100% per year is:
A) 1.5
B) 0.5
C) 0.25
D) None of the above

Name: The one-year discount factor at an interest rate of 100% per year is: A) 1.5 B) 0.5 C) 0.25 D) None of the above
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Question

Quizplus · Accepted Answer

The formula for calculating the one-year discount factor is: 1 / (1 + i), where i is the interest rate as a decimal. In this case, i = 1. So, the one-year discount factor is 1 / (1 + 1) = 1/2 = 0.5. Therefore, the correct choice is B.

The One-Year Discount Factor at an Interest Rate of 100