Question

Find the present value of $100 due in one year if the discount rate is 5%, 8%, 10%, 15%, 20%, and 25%. Please show your work so that I understand how your arrived at your answers

Subject is Managerial Economics

Answer 1

Solution :-

In Case of Discount Rate is 5% , The Present Value of $100 due in One Year

= $100 / 1.05 = $95.24

In Case of Discount Rate is 8% , The Present Value of $100 due in One Year

= $100 / 1.08 = $92.59

In Case of Discount Rate is 10% , The Present Value of $100 due in One Year

= $100 / 1.10 = $90.91

In Case of Discount Rate is 15% , The Present Value of $100 due in One Year

= $100 / 1.15 = $86.96

In Case of Discount Rate is 20% , The Present Value of $100 due in One Year

= $100 / 1.20 = $83.33

In Case of Discount Rate is 25% , The Present Value of $100 due in One Year

= $100 / 1.25 = $80

If there is any doubt please ask in comments

Thank you please rate