Consider the Following Timeline Detailing a Stream of Cash Flows

question 51

Multiple Choice

Consider the following timeline detailing a stream of cash flows: If the current market rate of interest is 8%,then the present value of this stream of cash flows is closest to:

• A)$22,871.
• B)$21,211.
• C)$24,074.
• D)$26,000.

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Definitions:

Credit Entries

Entries made on the right side of an account in double-entry bookkeeping, indicating an increase in liabilities, revenue, or equity, or a decrease in assets.

Revenues

The total income generated by a company from its normal business activities, often from the sale of goods and services to customers.

Cash Receipts

These are the amounts of money received by a company during a specific period, including all forms of cash inflow from operations, financing, and investing activities.

Cash Payments

Transactions in which payment for goods or services is made in cash at the time of the transaction.