Compute the Present Value of $3,000 Paid in Four Years

question 52

Multiple Choice

Compute the present value of $3,000 paid in four years using the following discount rates: 3 percent in year 1, 4 percent in year 2, 5 percent in year 3, and 6 percent in year 4.

• A) $1,998.73
• B) $2,109.14
• C) $2,491.28
• D) $2,516.26

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Definitions:

Financial Analysis Tools

Instruments and techniques used to evaluate a company's financial statements to make decisions about investments and other financial matters.

Common Size Statements

Financial statements that display all line items as a percentage of a common base figure, facilitating comparison across time and with other companies.

Managements' Discussion

A section of a company's annual report where management provides an analysis of the company's financial condition and operational results.

Altman's Z-Score

A formula used to predict the likelihood of a business entering bankruptcy within two years, based on various income and balance sheet values.