Interest Rates and Valuation Quiz
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Questions and Answers

What is the present value of $500 to be paid in three years if the interest rate is 8%?

  • $380.00
  • $532.00
  • $416.18 (correct)
  • $480.00
  • In the context of present value, why is a pound of cash flow to be received one year from now less valuable than a pound received today?

  • Due to the opportunity to earn interest on the pound received today (correct)
  • Due to inflation
  • Due to currency exchange rates
  • Due to changes in government policies
  • If the cash flow is $800 and the interest rate is 12%, what would be the present value for a period of four years?

  • $750.00
  • $624.00
  • $682.67 (correct)
  • $496.93
  • If the interest rate is 5% and the future value of an investment is $500, what is the present value?

    <p>$476.19</p> Signup and view all the answers

    What is the present value of $1000 to be paid in five years if the interest rate is 10%?

    <p>$620.92</p> Signup and view all the answers

    What is the present value of $300 to be paid in two years if the interest rate is 8%?

    <p>$258.68</p> Signup and view all the answers

    If the cash flow is $400 and the interest rate is 6%, what would be the present value for a period of three years?

    <p>$331.22</p> Signup and view all the answers

    If the present value of an investment is $600, the interest rate is 4%, what would be the future value in two years?

    <p>$657.92</p> Signup and view all the answers

    What is the present value of $150 to be paid in five years if the interest rate is 12%?

    <p>$79.44</p> Signup and view all the answers

    If the present value of an investment is $800, the future value in three years is $1000, what is the interest rate?

    <p>25%</p> Signup and view all the answers

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