Suppose you have $500 today and the risk-free interest rate (rf) is 5%. The equivalent value in one year is closest to:a.$475.b.$550c.$500.d.$476.e.$525.

Question

Suppose you have $500 today and the risk-free interest rate (rf) is 5%. The equivalent value in one year is closest to:a.$475.b.$550c.$500.d.$476.e.$525.
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Solution 1

The correct answer is e. $525.

Here's the step-by-step calculation:

  1. You start with $500.
  2. The risk-free interest rate is 5%. This means that for every dollar you have now, you will have $1.05 in one year.
  3. Multiply the amount you have now ($500) by 1.05 (the "1" represents the original amo Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solv

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