If the present value of $600 expected to be received one year from today is $400, what is the one-year discount rate?
A) 15%
B) 20%
C) 25%
D) 50%

Name: If the present value of $600 expected to be received one year from today is $400, what is the one-year discount rate? A) 15% B) 20% C) 25% D) 50%
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Question

Quizplus · Accepted Answer

The present value (PV) formula is PV = FV / (1 + r), where FV is the future value and r is the discount rate. Solving for r: $400 = $600 / (1 + r) gives r = 0.50 or 50%.

If the Present Value of $600 Expected to Be Received