Alice Says That the Present Value of $700 to Be

Alice says that the present value of $700 to be received one year from today if the interest rate is 6 percent is less than the present value of $700 to be received two years from today if the interest rate is 3 percent. Beth says that $700 saved for one year at 6 percent interest has a smaller future value than $700 saved for two years at 3 percent interest.

A) Both Alice and Beth are correct.
B) Both Alice and Beth are incorrect.
C) Only Alice is correct.
D) Only Beth is correct.

Correct Answer:

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