Interest rates in the economy are 8% per year for the one-year horizon and 10% per year for the two-year horizon.

You expect a cash flow of 500$ one year from know and another 500$ two years from now.

What is the present value of the cash flows you expect?

a.

867$

b.

779$

c.

912$

d.

892$

e.

876$

f.

899$

g.

818$

h.

1,000$