If the one-year discount factor is equal to 0.94340, the interest must be equal to ________,
A) 3.0%
B) 4.8%
C) 5.5%
D) 6.0%

Name: If the one-year discount factor is equal to 0.94340, the interest must be equal to ________, A) 3.0% B) 4.8% C) 5.5% D) 6.0%
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Question

Quizplus · Accepted Answer

D) 1 / (1 + r) = 0.94340
1 = (1 + r) × 0.94340
1 = 0.94340 + 0.94340r
1 - 0.94340 = 0.94340r
0.05660 = 0.94340r
r = 0.05660 / 0.94340 = 0.06 = 6%

If the One-Year Discount Factor Is Equal to 0