Multiple choice

1.  If the one-year discount factor is 0.8333, what is the discount rate (interest rate) per year?  

a. 10% 

b. 20% 

c. 30% 

d. None of the above 

2.  If the present value of $480 to be paid at the end of one year is $400, what is the one-year discount factor?  

a. 0.8333 

b. 1.20 

c. 0.20 

d. None of the above 

3.  If the present value of $250 expected to be received one year from today is $200, what is the discount rate?  

a. 10% 

b. 20%  

c. 25% 

d. None of the above 

4.  If the one-year discount factor is 0.90, what is the present value of $120 to be received one year from today?  

a. $100 

b. $96 

c. $108 

d. None of the above