The discount factor used to obtain the present value of money in the next period where k represents the rate of return is
A)k.
B)1 + k.
C)1/(1 + k).
D)k /(1 + k).

Question

Quizplus · Accepted Answer

The discount factor used to obtain the present value of money in the next period is given by the formula 1/(1 + k), where k represents the rate of return. This is because the present value is equal to the future value divided by (1 + k) raised to the power of the number of periods between the present and the future. Therefore, the correct answer is C.

The Discount Factor Used to Obtain the Present Value of Money