If the present value of $400 paid one year from now is $320, what is the one-year interest rate? (Note: this number is also known as the discount rate.)
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Answer:
20% or 0.2
Step-by-step explanation:
Present Value = $320
Before 1 One Year, Value =$400
Discount = $400-$320= $80
% Discount = (Discount/Amount Before 1 Year)*100
%D = (80/400)*100
.%D = 20% Or 0.2
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