A business can either receive £200 now or an agreed amount in two years' time. If the business requires a return of 12% on sums invested, what is the minimum amount the business should agree to receive in two years' time?

Question

Quizplus · Accepted Answer

The future value of £200 invested at a 12% annual return over two years is calculated using the formula: Future Value = Present Value * (1 + rate)^number of years. Therefore, £200 * (1 + 0.12)^2 = £200 * 1.2544 = £250.88, which rounds to £251.

A Business Can Either Receive £200 Now or an Agreed