If $476 invested today yields $500 in one year's time,what is the discount factor?
A)0.05
B)0.95
C)1.05
D)1.50

Question

Quizplus · Accepted Answer

Discount factor is the factor by which the future value is reduced to get the present value.
In this case, the present value is $476 and the future value is $500, so the discount factor is:
Discount factor = Present value/Future value = 476/500 = 0.952
So, the best choice is B, which is 0.95 (rounded to two decimal places).

If $476 Invested Today Yields $500 in One Year's Time,what