An investor who requires a 7% rate of return should be willing to pay $934.58 now to receive $1,000 at the end of one year.

Question

Quizplus · Accepted Answer

This is because $934.58 is the present value of $1,000 discounted at a 7% rate of return for one year, calculated using the formula PV = FV / (1 + r)^n, where PV is the present value, FV is the future value ($1,000), r is the rate of return (0.07), and n is the number of periods (1 year).

An Investor Who Requires a 7% Rate of Return Should