Suppose the interest rate is 5 percent. Consider four payment options: Option A: $500 today.
Option B: $515 one year from today.
Option C: $615 two years from today.
Option D: $690 three years from today.

Which of the payments has the highest present value today?
A)Option A
B)Option D
C)Option B
D)Option C

Question

Suppose the interest rate is 5 percent. Consider four payment options: Option A: $500 today.
Option B: $515 one year from today.
Option C: $615 two years from today.
Option D: $690 three years from today.
​
Which of the payments has the highest present value today?
A)Option A
B)Option D
C)Option B
D)Option C

Quizplus · Accepted Answer

The Answer of Suppose the interest rate is 5 percent. Consider four payment options: Option A: $500 today.
Option B: $515 one year from today.
Option C: $615 two years from today.
Option D: $690 three years from today.
​
Which of the payments has the highest present value today?
A)Option A
B)Option D
C)Option B
D)Option C

Suppose the Interest Rate Is 5 Percent