Asked by Cassandra Barrios on Jun 15, 2024
Verified
Which would you rather have? a)$100 today or b)$200 in 9 years if the interest rate is 8%.
Interest Rate
The fraction of a loan incurred as interest cost to the borrower, often expressed annually as a percentage of the total loan amount still due.
- Assess different investment possibilities to determine the one with the maximum financial advantage.
- Grasp the association between interest rates, periods, and the future valuation of investments.
Verified Answer
CB
Cassandra BarryJun 17, 2024
Final Answer :
a)$100;b)$200 x 50.02 = $100.04
The present value of b)$100.04 is greater than the present value of a)$100.
The present value of b)$100.04 is greater than the present value of a)$100.
Learning Objectives
- Assess different investment possibilities to determine the one with the maximum financial advantage.
- Grasp the association between interest rates, periods, and the future valuation of investments.
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