If the present value of $600, expected one year from today, is $400, what is the one-year discount rate?
A)15 percent
B)20 percent
C)25 percent
D)50 percent

Question

Quizplus · Accepted Answer

The discount rate can be found using the formula for present value: Present Value = Future Value / (1 + Discount Rate). Plugging in the given values: $400 = $600 / (1 + Discount Rate). Solving for the discount rate gives a rate of 50%.

If the Present Value of $600, Expected One Year from Today