If money if worth $1,500 now and $1,540 in 90 days, determine the rate of return that an investor would be indifferent between the two options.
A) 12.45%
B) 11.23%
C) 10.81%
D) 9.63%
E) 8.85%

Question

Quizplus · Accepted Answer

The rate of return can be calculated using the formula for simple interest: Rate = (Future Value - Present Value) / (Present Value * Time). Here, Time is 90/365 years. Plugging in the values: Rate = ($1,540 - $1,500) / ($1,500 * (90/365)) = 0.1081 or 10.81%.

If Money If Worth $1,500 Now and $1,540 in 90