Consider the following timeline: If the current market rate of interest is 8%, then the present value (PV) of this timeline as of year 0 is closest to ________.
A) $502
B) $653
C) $600
D) $1004

Question

Consider the following timeline:  If the current market rate of interest is 8%, then the present value (PV) of this timeline as of year 0 is closest to ________.
A) $502 
B) $653 
C) $600 
D) $1004

Quizplus · Accepted Answer

A) PV = 11ea84dc_f584_6f47_9a63_5504505aa49c_TB1316_11_TB1316_11 100 / 11ea84dc_f584_9658_9a63_cf0f1cca8da6_TB1316_11_TB1316_11 = 92.59
200 / 11ea84dc_f584_9659_9a63_2dee7938b731_TB1316_11_TB1316_11 = 171.47
300 / 11ea84dc_f584_965a_9a63_4d1909e591bd_TB1316_11_TB1316_11 = 238.15
Sum = $502.21, which is approximately $502.

Consider the Following Timeline: If the Current Market Rate