Solved

You Have Won a Contest and Are Allowed to Choose

Question 60

Multiple Choice

You have won a contest and are allowed to choose between two prizes. One option is to receive $200 today and another $200 one year from now. The second option is $100 today and an additional $325 one year from now. At what interest rate (if any) is the present value of the two prizes identical?


A) 0 percent
B) 5 percent
C) 10 percent
D) 25 percent
E) none of the above

Correct Answer:

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