Consider the two investments shown in the table. Find the present value of each at Year 0 assuming an interest rate of 5%
What is the percentage difference in the present values (with Investment 1 as the base of the percentage)?
Year Investment #1 Investment #2
0 $0 $0
1 $100 $100
2 $100 $1,100
3 $1,100 $0
A) -3.8%
B) -2.6%
C) 3.5%
D) 4.3%
E) -4%
A
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