The one-year discount factor, at a discount rate of 25 percent per year, is:
A)1.25.
B)1.0.
C)0.8.
D)0.75.

Name: The one-year discount factor, at a discount rate of 25 percent per year, is: A)1.25. B)1.0. C)0.8. D)0.75.
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Question

Quizplus · Accepted Answer

The formula for the one-year discount factor with a discount rate of r is:
Discount factor = 1 / (1 + r)
Substituting r = 0.25, we get:
Discount factor = 1 / (1 + 0.25) = 0.8
Therefore, the answer is option C.

The One-Year Discount Factor, at a Discount Rate of 25