If the interest rate is 12%, the current market value of $1 to be delivered in one year is

Question

Quizplus · Accepted Answer

The current market value of $1 to be delivered in one year at a 12% interest rate is calculated using the formula for present value: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value ($1 in this case), r is the interest rate (12% or 0.12), and n is the number of periods (1 year). Thus, PV = $1 / (1 + 0.12)^1 = $1 / 1.12 = $0.89.

If the Interest Rate Is 12%, the Current Market Value