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Time Value of money

Suppose the risk-free interest rate is 4%.

a. Having $200 today is equivalent to having what amount in one year?
b. Having $200 in one year is equivalent to having what amount today?
c. Which would you prefer, $200 today or $200 in one year? Does your answer depend on when you need the money? Why or why not?

Solution Preview

Suppose the risk-free interest rate is 4%.

a. Having $200 today is equivalent to having what amount in one year?
b. Having $200 in one year is equivalent to having what amount today?
c. Which would you prefer, $200 today or $200 in one year? Does your ...

Solution Summary

Response discusses and provides steps to calcualate the cases involving time Value of money

$2.19