Which of the following alternatives would you rather receive, assuming an interest rate of 8% per year, compounding annually? (You want to choose the option with the greatest monetary value) a. Receive 100 USD now b. Receive 120 USD in two years c. Receive 123 USD in three years d. Receive 125 USD in ten years

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Q: This helps ALOT but now I am confused how you got 41.55?

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.