Suppose the interest rate is 8 percent. Consider three payment options.
1) $300 today.
2) $330 one year from today.
3) $360 two years from today.
Which of the following is correct?
A) 1 has the highest present value and 2 has the lowest.
B) 2 has the highest present value and 3 has the lowest.
C) 3 has the highest present value and 1 has the lowest.
D) None of the above is correct.

Question

Suppose the interest rate is 8 percent. Consider three payment options. 
1) $300 today.
2) $330 one year from today.
3) $360 two years from today.
Which of the following is correct?
A) 1 has the highest present value and 2 has the lowest. 
B) 2 has the highest present value and 3 has the lowest.
C) 3 has the highest present value and 1 has the lowest.
D) None of the above is correct.

Quizplus · Accepted Answer

The Answer of Suppose the interest rate is 8 percent. Consider three payment options. 
1) $300 today.
2) $330 one year from today.
3) $360 two years from today.
Which of the following is correct?
A) 1 has the highest present value and 2 has the lowest. 
B) 2 has the highest present value and 3 has the lowest.
C) 3 has the highest present value and 1 has the lowest.
D) None of the above is correct.

Suppose the Interest Rate Is 8 Percent