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Sagot :
The present value of $121,000 expected to be received one year from today at an interest rate (discount rate) of 10% per year is (C) $110,000.
What is the discount rate?
- The discount rate is the interest rate charged to commercial banks and other financial institutions for Federal Reserve Bank short-term loans.
- The interest rate used in discounted cash flow (DCF) analysis to assess the present value of future cash flows is referred to as the discount rate.
- The formula for Discount Rate: First, the present value is divided by the value of a future cash flow (FV) (PV) The previous step's result is then multiplied by the reciprocal of the number of years (n) Finally, the discount rate is calculated by subtracting one from the value.
- As an example, the present value of $121,000 projected to be received one year from today at a ten percent annual discount rate is $110,000.
Therefore, the present value of $121,000 expected to be received one year from today at an interest rate (discount rate) of 10% per year is (C) $110,000.
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The complete question is given below:
The present value of $121,000 expected to be received one year from today at an interest rate (discount rate) of 10% per year is:
A) $121,000
B) $100,000
C) $110,000
D) None of the above
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