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

Question

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

Quizplus · Accepted Answer

This is because the present value of $110 received one year from now at a cost of 6% would be $104, which is higher than the present value of $100 received immediately. The calculation used to arrive at this present value is $110 x 0.943, where 0.943 is the present value factor for one year at 6%.

If an Individual's Cost of Capital Were 6%, He/she Would