If the Present Value of $480 to Be Paid at the End

question 2

Multiple Choice

If the present value of $480 to be paid at the end of one year is $400, what is the one-year discount factor?

• A)0.8333
• B)1.20
• C)0.20
• D)1.00

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Definitions:

Corporate Form

A legal structure for organizations that allows them to operate as separate legal entities from their owners, with the ability to hold assets, sue, and be sued.

Accounting

Accounting is the systematic practice, work, or process of communicating and recording financial information for a business or individual.

Finance

The management of large amounts of money, especially by governments or large companies, including the processes of investing, borrowing, lending, budgeting, saving, and forecasting.

Stocks and Bonds

Financial instruments that represent ownership in a company (stocks) and debt obligations (bonds), respectively, offering different levels of risk and potential returns.