If the nominal interest rate is 4.6% per year, how much money can an individual borrow today if she needs to repay $300 in one year?
A) $286.81.
B) $256.81.
C) $180.81.
D) $208.81.
E) $166.81.

Question

Quizplus · Accepted Answer

To find out how much can be borrowed today (the present value), use the formula for present value: PV = FV / (1 + r), where FV is the future value ($300), and r is the nominal interest rate (4.6% or 0.046). Plugging in the numbers: PV = $300 / (1 + 0.046) = $286.81.

If the Nominal Interest Rate Is 4