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  • 11-01-2021
  • Business
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Assume the appropriate discount rate is 2% per period. The discount factor for a cash flow 10 periods from today is closest to:

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  • 11-01-2021

Answer:

0.8203

Explanation:

Given that :

Using the discount factor formula :

1 / (1 + r)^n

r = discount rate = 2% = 0.02

n = number of periods = 10

1 / (1 + 0.02)^10

1 / (1.02)^10

1 / 1.21899441999475713024

= 0.8203482

= 0.8203

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