What Is the Present Value of an Indefinite Annual Payment

question 34

Multiple Choice

What is the present value of an indefinite annual payment of £20, where the discount rate is 10 per cent?

• A) £200
• B) £220
• C) £22
• D) £181.82

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Definitions:

Minority Interest

The share of ownership in a subsidiary company that is not owned or controlled by the parent corporation.

Subsidiary's Stock

Shares owned in a company that is controlled by another entity (the parent company), often by owning the majority of its stock.

Consolidation Procedures

Accounting processes used to combine the financial statements of a parent company with its subsidiaries, presenting the group as a single economic entity.

100%-Owned Subsidiaries

Companies completely owned by another company, allowing the parent full control over operations and decisions.