Asked by
Taylor Sutherland
on Dec 12, 2024
Verified
If the interest rate is 10 percent, the net present value of $500 to be received one year from now is
A) $413.22.
B) $450.
C) $454.55.
D) $500.
Interest Rate
The percentage of a loan that incurs interest costs for the borrower, often stated as an annual rate of the outstanding loan amount.
Net Present Value
A calculation that compares the value of all future cash flows of a project, discounted back to the present, to the initial investment.
- Absorb the theory of net present value (NPV) and understand the algorithm for computing it.
- Ascertain the contemporary valuation of imminent monetary inflows at various interest percentages.
Verified Answer
KI
Learning Objectives
- Absorb the theory of net present value (NPV) and understand the algorithm for computing it.
- Ascertain the contemporary valuation of imminent monetary inflows at various interest percentages.