Question

Suppose you will receive $500 in one year and the risk-free interest rate (rf) is 5%. The equivalent value today is closest to:

Answer 1

$525

Step-by-step explanation:

Calculation for The equivalent value today

Equivalent value=$500 × (1+.05)

Equivalent value=$500 × (1.05)

Equivalent value= $525

Therefore The equivalent value today is closest to:$525