Consider the Following Timeline Detailing a Stream of Cash Flows

question 15

Multiple Choice

Consider the following timeline detailing a stream of cash flows: If the current market rate of interest is 10%,then the present value of this stream of cash flows is closest to:

• A)$674.
• B)$600.
• C)$460.
• D)$287.

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Definitions:

Sample Information

Data collected from a subset of a larger population, used to make inferences about the population.

T-Distribution

A type of probability distribution that is symmetric and bell-shaped, but with heavier tails than a normal distribution, used especially in statistics for small sample sizes.

Normally Distributed

Refers to a type of probability distribution that is evenly balanced around the mean, indicating that values close to the mean occur more often than values further from the mean.

Population

The entire group of individuals or instances about whom the data is collected and which the statistical analysis is based upon.