If an individual's cost of capital were 6%, the person would prefer to receive $110 at the end of one year rather than $100 right now.
PV = FV × PV_IF (App. B: 6%, 1 period)
= $110 × 0.943 = $104

Question

If an individual's cost of capital were 6%, the person would prefer to receive $110 at the end of one year rather than $100 right now. PV = FV × PV_IF (App. B: 6%, 1 period) = $110 × 0.943 = $104

Quizplus · Accepted Answer

The present value of $110 received in one year at a 6% discount rate is $104, which is greater than $100 received now, making the future payment more preferable.

If an Individual's Cost of Capital Were 6%, the Person