If the one-year discount factor is 0.8333,what is the discount rate (interest rate)per year?
A)10%
B)20%
C)30%
D)40%

Name: If the one-year discount factor is 0.8333,what is the discount rate (interest rate)per year? A)10% B)20% C)30% D)40%
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Question

Quizplus · Accepted Answer

The discount factor is calculated as (1/(1+r))^t, where r is the interest rate and t is the time period, in this case, t=1.

0.8333 = (1/(1+r))^1

Solving for r, we get:

r = 0.2 or 20%

Therefore, the answer is B.

If the One-Year Discount Factor Is 0