Question

if you receive $100 five years from now, what is the pv of that $100 if you use a 6% interest or discount rate?

Answer 1

if you receive $100 five years from now,  the pv of that $100 if you use a 6% interest is $130

Interest = 100*6*5/100 = 30

PV = 100+30 = 130

What is interest rate?

In relation to the amount lent, deposited, or borrowed, the amount of interest due each period is expressed as an interest rate. The amount lent or borrowed, as well as the interest rate, frequency of compounding, and the period of time during which it is lent, deposited, or borrowed, all affect how much interest will be charged overall.

One of the most crucial elements of the US economic system is the interest rate.

They have an impact on borrowing costs, the rate of return on savings, and they contribute significantly to the overall return on many assets. In addition, certain interest rates offer information about upcoming financial market and economic activities.

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