Suppose you have $1000 today and the risk-free rate of interest (rf) is 3%. The equivalent...

Question

Question

Suppose you have $1000 today and the risk-free rate of interest (rf) is 3%. The equivalent value in one year is closest to:

$1000.00 today.

$965.00 today.

$1030.00 today.

$966.18 today.

Answer 1

Answer #1

Given:

Present Value (PV)= $1,000

Interest rate= 3%

Time period= 1 year

The question is solved with the help of a financial calculator b inputting the below:

PV= -1,000; I/Y= 3; N=1

Press CPT and FV to calculate the value in one year.

The equivalent value in one year is $1,030.

I hope that was useful :)

Answer 2

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