Of the following interest rates,which is the highest one at which you would prefer to have $200 ten years from today instead of $100 today?
A) 2 percent
B) 4 percent
C) 6 percent
D) 8 percent

Question

Quizplus · Accepted Answer

This is because if we invest the $100 at a 6 percent interest rate, it will grow to $200 in exactly 10 years. Therefore, we would prefer to have $200 in 10 years at a 6 percent interest rate rather than $100 today. The other interest rates (2 percent, 4 percent, and 8 percent) do not allow the initial $100 to grow to $200 in exactly 10 years.

Of the Following Interest Rates,which Is the Highest One at Which