a. How much is $225 to be received in exactly one year worth to you today is the interest rate is 20%?
b. This same $225 received in one year would be worth ? today if the interest rate rose to 25%.
a) $225 present value at 20% is:-
=Future value/(1+rate)^n
=225/(1+20%)^1
=187.50
b) $225 present value at 25% is:-
=225/(1+25%)^1
=180.00
a. How much is $225 to be received in exactly one year worth to you today...