The present value of 300 received 5 years in the future would be calculated as which of the following when the interest rate is 5?
A) 300/(1.5)5 B) 5.05/300 C) 300/(1.05)5 D) 300 1.5 5
Question 2
If you want to know the present value of 10,000 received a year from today, and the interest rate is 4 percent, what formula can you use?
A) Present value equals 10,000 times 0.04. B) Present value equals 1.04 divided by 10,000.
C) Present value equals 10,000 divided by 1.04 D) Present value equals 10,000 times 1.04.
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