Asked by
James Bryan
on Dec 12, 2024
Verified
If the interest rate is 10 percent, the net present value of $600 to be received two years from now is
A) $495.87.
B) $545.45.
C) $600.
D) $660.
Net Present Value
A financial metric used to appraise the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period.
Interest Rate
The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal, over a given period.
- Understand the concept of net present value (NPV) and its calculation.
- Calculate the present value of future cash flows at different interest rates.
Verified Answer
ÆA
Learning Objectives
- Understand the concept of net present value (NPV) and its calculation.
- Calculate the present value of future cash flows at different interest rates.