What would be more valuable, receiving $500 today or receiving $625 in three years if interest rates are 7 percent? Why?
Answer to relevant QuestionsWhich cash flow would you rather pay, $425 today or $500 in two years if interest rates are 10 percent? Why?What annual rate of return is earned on a $1,000 investment when it grows to $1,800 in six years? You invested $3,000 in the stock market one year ago. Today, the investment is valued at $3,750. What return did you earn? What return would you suffer next year for your investment to be valued at the original $3,000? ...Determine the interest rate earned on a $2,300 deposit when $2,900 is paid back in one year. Compute the future value in year 9 of a $2,000 deposit in year 1 and another $1,500 deposit at the end of year 3 using a 10 percent interest rate.
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