Assume that the nominal interest rate is equal to 0. Use this information and the information about the payments provided below, rank the following three sequences of payments according to their present value.
A) B A C
B) A C B
C) C B A
D) A B C
E) None of the above.

Question

Assume that the nominal interest rate is equal to 0. Use this information and the information about the payments provided below, rank the following three sequences of payments according to their present value.
A) B > A > C
B) A > C > B
C) C > B > A
D) A > B > C
E) None of the above.

Quizplus · Accepted Answer

With a nominal interest rate of 0%, the present value of any sequence of payments is simply the sum of the payments, as there is no discounting effect. Without specific information about the amounts or timing of the payments in each sequence, it's impossible to accurately rank them based on present value.

Assume That the Nominal Interest Rate Is Equal to 0