Economists Use the Concept of Present Value to Determine

question 9

Multiple Choice

Economists use the concept of present value to determine

• A) the amount someone would be willing to pay in the future for a discounted value today.
• B) the price of a unit of physical capital in the future.
• C) the value in the future of a given stock of physical capital.
• D) the marginal revenue product of a unit of capital.
• E) the amount someone would be willing to pay today to get a payment or stream of payments in the future.

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Definitions:

Investing Activities

Financial transactions related to the purchase and sale of long-term assets and other investments, reflecting how a company allocates its resources to generate future growth and income.

Cash Dividend

A payment made by a company out of its earnings to shareholders, usually in the form of cash.

Net Cash

The amount of cash available after accounting for cash inflows and outflows. It can indicate a company's liquidity position.

Financing Activities

transactions that result in changes in the size and composition of the equity capital and borrowings of the entity, as reported in the cash flow statement.