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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