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You Receive $500 Today Which You Plan to Save for Two

Question 48

Multiple Choice

You receive $500 today which you plan to save for two years. Also, in two years you will be given another $500. If the interest rate is 5 percent, what is the present value of the payment of $500 today and the $500 in two years?


A) $500(1.05) 2 + $500/(1.05) 2
B) $500(1.05) 2 + $500
C) $500 + $500/(1.05) 2
D) $500 + $500

Correct Answer:

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