If the interest rate is 4 percent, then you would be equally happy if you received a gift of either $100 today or a gift of
A)$110.00 two years from today.
B)$112.49 three years from today.
C)$116.00 four years from today.
D)$123.67 five years from today.

Question

Quizplus · Accepted Answer

To determine which option would make you equally happy as receiving $100 today at an interest rate of 4 percent, you need to calculate the future value of $100 after a certain number of years using the formula for compound interest: Future Value = Present Value * (1 + rate)^n, where n is the number of years. For option B, calculating the future value of $100 after 3 years at 4% interest gives: $100 * (1 + 0.04)^3 = $112.49, which matches the option, indicating that you would be equally happy receiving $112.49 three years from today as you would be with $100 today.

If the Interest Rate Is 4 Percent, Then You Would