The solution to this problem requires time value of money calculations. Reference to Tables 9-1 through 9-4 in the text is necessary to complete the calculations. If you must calculate the present value of an amount at 8% compounded quarterly for 2 years, then the interest factor used in the calculation is
A) 2% for eight periods
B) twice that for one period at 8% multiplied by 2
C) 8% for two periods
D) the interest factor for 8% for two periods divided by 4

Question

Quizplus · Accepted Answer

The interest rate per period is 2% (8% annual rate divided by 4 quarters), and there are 8 periods (2 years times 4 quarters per year).

The Solution to This Problem Requires Time Value of Money