If the interest rate is 5 percent, then receiving $1,000 eight years from now is worth more than receiving $700 today.

Name: If the interest rate is 5 percent, then receiving $1,000 eight years from now is worth more than receiving $700 today.
Brand: Quizplus
Rating: 4.7 (37 reviews)

Question

If the interest rate is 5 percent, then receiving $1,000 eight years from now is worth more than receiving $700 today.​

Quizplus · Accepted Answer

To determine which is worth more, you would discount the future value ($1,000) back to its present value using the 5 percent interest rate. Over 8 years, the present value of $1,000 would be less than $700, making $700 today worth more.

If the Interest Rate Is 5 Percent, Then Receiving $1,000