Question: How are present values affected by changes in interest rates
How are present values affected by changes in interest rates?
Answer to relevant QuestionsWithout making any computations, indicate which of each pair has a higher interest rate?a. $100 doubles to $200 in 5 years or 7 years.b. $500 increases in 4 years to $750 or to $800.c. $300 increases to $450 in 2 years or ...Show the time line for a $400 cash outflow today, a $518 cash inflow in year 3, and a 9 percent interest rate. What is the present value of a $350 payment in one year when the discount rate is 10 percent?What would be more valuable, receiving $500 today or receiving $625 in three years if interest rates are 7 percent? Why?How long will it take $2,000 to reach $5,000 when it grows at 10 percent per year?
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