Vince Says That the Present Value of $500 to Be

Multiple Choice

Vince says that the present value of $500 to be received one year from today if the interest rate is 8 percent is more than the present value of $500 to be received two years from today if the interest rate is 4 percent.Terri says that $500 saved for two years at an interest rate of 3 percent has a larger future value than $500 saved for one years at an interest rate of 6 percent.

A) Both Vince and Terri are correct.
B) Only Vince is correct.
C) Only Terri is correct.
D) Neither Vince nor Terri is correct.