The discount factor used to obtain the present value of money in the next period where k represents the rate of return is

Question

Quizplus · Accepted Answer

The correct discount factor to obtain the present value of money in the next period is 1/(1+k). This formula is based on the concept of compounding, which means that the future value of money can be calculated by multiplying the present value by (1+k), where k is the rate of return. Therefore, to obtain the present value, we need to divide the future value by (1+k), which gives us the discount factor of 1/(1+k).

The Discount Factor Used to Obtain the Present Value of Money